As the IRS receives a massive funding boost aimed at improving enforcement efforts and closing the “tax gap,” many taxpayers may be wondering how to avoid getting audited. While it is impossible to completely eliminate the chances of being audited, there are practical steps you can take to lessen your exposure.
The most crucial step is to avoid making common mistakes that are frequently flagged by IRS computers, such as filing or paying taxes late or not reporting all income that has been reported to the IRS by others. Additionally, taxpayers should avoid reporting losses from business activities that the IRS might view as hobbies and should provide specific information about their deductions.
Other actions to avoid include using the same annual figures repeatedly and using all perfectly round numbers in your tax return. Taking these precautions can help reduce the likelihood of being selected for an audit by the IRS.