It is every taxpayer’s hope that they won’t be selected for an audit by the Internal Revenue Service. Every year the IRS randomly picks tax returns to review. Tax returns that are suspect may also be reviewed more closely.
Although there is nothing a taxpayer in New York City and beyond can do to guarantee that they will avoid an IRS audit, there may be things people can do to make sure their tax returns don’t look suspicious.
For instance, people who choose to complete their taxes themselves should take their time. That way people are more likely to avoid simple mistakes. People who complete their own taxes would also be wise to file their tax returns electronically.
Although it may seem obvious, people need to be sure they are reporting all of their income, even winnings at a casino should be accounted for.
People who work out of their homes may be able to claim deductions for business-related expenses. Deductions cannot be claimed, however, for expenses related to a hobby.
About 4 percent of taxpayers who earn $200,000 or less will face an IRS audit. About 12 percent of people who make more than $1 million will be audited. An audit does not necessarily mean that an individual did anything wrong. An audit simply allows the IRS to examine an individual’s tax return more closely.
Whether you earn a little or a lot, people should be sure they have documentation that supports their tax return. With the right documents in place, people have little to worry about.