How To Avoid A Tax Audit, And How To Prepare For One
As you file your tax return, do you wonder whether you're likely to get audited?
You can take some comfort in the fact that audits are remarkably rare, hitting about 1% of taxpayers each year. However, the rate is rising, and if you happen to pull a few audit triggers, your chance of getting that ominous letter or phone call from the Internal Revenue Service can soar tenfold or more, experts say.
"I am hearing about more audits than I ever have," said Roni Deutch, a tax attorney in Northern California who has been practicing for 17 years. "People will try to alleviate your fears and tell you that an audit is not a big deal. It is a big deal. It's like having a root canal without Novocain."
The number of returns audited by the IRS jumped 7% last year to 1.38 million, up from 1.29 million in 2006.
If you're an honest taxpayer, you should never avoid taking a legitimate deduction just because it might trigger an audit, said Jeff Schnepper, author of "How to Pay Zero Taxes."
But you do need to be aware of the things that might get you audited, the different kinds of audits, and how you ought to deal with them.
Keep reading here.