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Reducing the odds of an IRS audit

| Feb 12, 2018 | audits

The odds of a Maryland resident being audited are relatively low. According to the IRS, only .7 percent of returns were selected for review in 2015. However, there are steps that one could take to help further reduce the risk of coming under IRS scrutiny. It is important to note that there is no way to eliminate the risk of an audit as some returns are selected randomly for review.

As a general rule, the IRS is more likely to review returns that look unusual or contain math errors. Using a software program to calculate figures used on a return may work to reduce those types of mistakes. Taxpayers who feel that claiming a deduction will increase their audit risk should still take it if it’s legitimate. However, they should be ready to prove that they were allowed to claim the deduction.

Business owners who claim a net loss on their returns each year may increase their risk of an audit. This is because the IRS knows that a person needs money to meet their basic needs. Those who are in the top income brackets are also at a higher risk for being audited. In 2014, 65 percent of audits involved people who had an adjusted gross income of $1 million or more.

If an individual is the subject of an IRS tax audit, a tax attorney could provide valuable guidance. They lawyer could work directly with the IRS on an individual’s behalf. In some cases, an individual may not owe any additional tax or could be entitled to a refund after having a tax return examined. If a taxpayer does owe money, he or she will likely have many options available to pay that debt.