Are You Increasing Your Chances of an Audit?
Are You Increasing Your Chances of an Audit?
Audit. It’s the dreaded “A” word at tax time. The word can send chills down almost any taxpayers’ spine. Being audited by the IRS is not a pleasant experience. But if you’re ever selected for an audit, it’s not the end of the world. You can get through it. And if you need help, you can contact GROCO. In any case, did you know that your chances of being audited are actually quite slim? Furthermore, if you do everything right and on the level, then you have nothing to worry about, even if you are selected.
On the other hand, if you knowingly cheat on your taxes, then anything is possible. But lets’ say you do everything by the book; could you still be audited? Yes, it’s certainly possible, but there are certain things that make you less likely to be audited. So, are you doing the right things to avoid being audited? Here are a few things to watch out for.
Common Mistakes the Make Audits More Likely
Speed Kills–one of the most common mistakes people make is to rush through their taxes. No one wants to spend more time than they have to filing their tax return. The problem is, when you go to fast you’re more likely to make mistakes. The more mistakes you make the more likely you’ll get the IRS’s attention. Slow down. Take your time and get it right the first time. This will reduce your chances of being audited.
Guesstimating–in case you weren’t aware already, the IRS is into the details. In other words, they like accuracy. Sure you can be off a few cents, but guessing on the numbers throughout your return is sure fire way to increase your audit chance. The best thing to do here is use the actual hard numbers. Leave the guessing to your lottery numbers. Get your tax numbers exact.
Paper Filing–does anyone still file his or her taxes on paper? Well, some taxpayers actually do. But you shouldn’t if you want to lower your risk of being audited. It’s not that paper itself is a problem. It’s that you’re more likely to mess up if you do your taxes on paper. With so many helpful electronic tax tools available your data is more likely to be accurate, thus reducing your audit risk.
Using Deductions Unwisely–everyone loves deductions. But if you appear to be claiming too many deductions then you might cause the IRS to take a closer look at your return. It’s perfectly legal to claim every deduction you’re entitled to. But make sure you have hard proof of every deduction you claim. Also use hard numbers when reporting your deductions instead of guessing or rounding. Your deductions should also be in line with your income. Claiming a charitable deduction of $20,000 when you only make $55,000 is a great way to raise suspicion.
Be Honest and Be Smart
The bottom line, if you want to lower your audit risk, stick to these simple rules and avoid doing anything dishonest.
We hope you found this article about “Are You Increasing Your Chances of an Audit?” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
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Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
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Introduction (teaching business success at Barr Business School) In this interview, Alan Olsen, CPA, MBA discusses teaching business success with Dr. Frumi Rachel Barr. Dr. Frumi Rachel Barr is the Founder and Chief Mentor at the Barr Business School. Transcript: Alan Olsen Hi, this is Alan Olsen and welcome to American Dreams. My guest today is…
Introduction (one innovative approach to treat congenital heart disease ) In this interview, Alan Olsen, CPA, MBA discusses how regenerative medicine can fight congenital heart disease with featured guest Dr. Timothy Nelson, MD, PhD. Dr. Nelson is a general internal medicine practitioner, with a specialty interest in regenerative medicine and the director of the Todd…
Learn how to build and preserve legacy wealth for generations, the American Dreams Impact Legacy Conference! Tuesday, September 19th at 10 AM PST, Don’t miss this online event! Click this link to register for the webinar. 50% discount with the code “DREAM50“ Learn the importance of crafting your family’s legacy with intent, rather than leaving…
Introduction In this interview, Alan Olsen, CPA, MBA discusses building financial peace with Mike Bennett. Mike is the Managing Partner of Crewe Capital. Transcript: Alan Olsen Hi, this is Alan Olsen and welcome to American Dreams. My guest today is Michael Bennett. Mike, welcome to the show. Mike Bennett Thanks for having me on. Alan…