* Tax Law changes every year. We keep track of all the tax law change to help you get your maximum refund and credit. *
Tips for Reduce the Chance of an Audit
1.Be Neat, thorough and Exact; Don’t make math errors.
2.Don’t File too Early, unless you are owed a substantial refund. The IRS generally has three years after April 15 to decide whether to audit your return. Filing early just gives the IRS more time to think about whether you should be audited.
3.Don’t use round numbers for deductions: For example, $1000, instead of $978. It’s an indication that you are estimating things rather than keeping good records.
4.Don’t Understate your Earnings or overstate your deduction. For example: You claim $25,000 in charitable contribution and your adjusted gross income is $75,000.
5.May increase your audit chance: Report side-Job income as other income on form 1040 income tax return line 22. Technically, side-job income is usually reported on Schedule C, Profit or loss from Business.
6.Form a Business Entity: The IRS audit rate statistics, discuss above, show those related information. However, you must balance this against the time and expense involved in forming a corporation. Forming a corporation (LLC) has more complex tax returns. Moreover, in some state, such as California need to pay State minimum tax yearly.
7.Don’t Mix Business with Pleasure: For example, while you are a claiming home office deduction, include only the amount of space you are using strictly as your office.
8.Explain items the IRS will Question: For example, you have a substantial bad debt deduction, explain the circumstances showing the bad debt is a legitimate business expense.
9.Avoid Ambiguous or General Expense: For example, If you have expense under “ Miscellaneous” or “General expense”, be specific –name specific expense for it.
10.Report All of Your Income: Some of people received IRS notice because they didn’t include some of their income from interest or capital sales. These information are already furnish to IRS by your bank or financial institution.
11.Watch Your Income – to – Deduction Ratio: For example, if your total business expense amount to less than 50% of your gross business income.
12.Beware of Abnormally Large Deductions: It is not just the total amount of your deductions that is important. Very large individual deduction can also increase your audit chance such as claim a $50,000 auto expense for a real estate agent.