Randolph Law Firm, P.C.

Certain steps can help one to avoid a tax audit

Filing taxes can be one of the most stressful experiences a person faces in Nevada. However, even scarier may be getting the news that one will be audited by the IRS. Some tips can help people to avoid being chosen for a tax audit and how to effectively respond to one.

It is important that a person's tax return is prepared using a computer filing program that features internal checks, as these checks can help to prevent calculation errors. These programs can also be beneficial because they help people to find deductions. In addition, note that using Schedule C, which addresses business profit/loss when filing can attract an auditor's eyes.

It's also important that any big deduction claims are backed up. This can be done by attaching photos, insurance reports, canceled checks or repair receipts, for example. It is also wise not to round numbers when calculating deductions, as this makes it look like a person is estimating amounts, which can be a red flag to the IRS. Furthermore, it's best not to volunteer to give the IRS more documents than necessary, as this may open a person up to other unanticipated issues and red flags.

Unfortunately, less than 25 percent of people audited are able to avoid paying out extra taxes. An applied knowledge of tax laws can help a person in Nevada to be ready for a tax audit in the event that he or she becomes the "chosen" one. Proper legal guidance can help a person to navigate the process and achieve the most favorable outcome in such a situation.

Source: findlaw.com, "What to Do if the IRS Audits You", Oct. 17, 2014

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