Reducing your chances of an audit

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Updated: 3/27/2003 1:10 pm
The Internal Revenue Service, or IRS (I-R-S), audits tax returns to ensure that the information you've reported is accurate. If an auditor discovers discrepancies in figures or underreported income, you could face fines or even criminal charges, depending on the circumstances. To help reduce your chances of being audited, there are a few points to remember. Try to fill out your return by computer. Not only does the paperwork appear neater overall, it can be easier to read than one filled out by hand. The figures on computerized returns are often calculated by machine, thereby reducing the chances of error. Most professional tax preparers use computer programs to complete tax returns. Using a computer also provides you the option of filing electronically, avoiding the paperwork and delayed processing often associated with filing by regular mail. If you don't use a computer to fill out your return, make sure that your writing is clear and that your figures are clearly written. The copy you submit to the IRS should be neat and free of corrections. Another technique that may save you from an audit is to use actual figures rather than rounded numbers. For example, claiming $678 (six hundred and seventy-eight dollars) instead of $700 (seven hundred dollars) may make it appear that you added actual figures instead of estimating, which may appear more favorable to IRS inspectors. You might also try to avoid filing certain forms with your tax return. Returns using a Schedule C form, for instance, are often audited to ensure that the claims made are true and accurate. Instead of claiming small amounts of extra income on a Schedule C, you may have the option of claiming it as 'other income' on your return. It may also be possible to reduce your chances of an audit by moving, since tax returns filed in certain states can be more prone to audits than those filed in other areas. In addition, you might consider attaching proof of your claims if you're making out-of-the-ordinary deductions. Such unusual deductions can include losses due to natural disasters like hurricanes, storms, or fire. Though you can't omit your chances of being audited, you may be able to reduce them. If you'd like to know more about minimizing the probability that you'll be audited, talk to a tax professional.

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