How to Avoid an IRS Audit

Getting notified that you’re going to be audited by the IRS can be as distressing as it may be upsetting and scary. Although IRS audits are relatively rare, there are some factors that can make you more – or less – likely to be the subject of one. In fact, as financial counselor and best-selling author Eric Tyson has astutely explained:1

Although no one is exempt from the ‘audit lottery,’ there are certain things you can do to make it less likely that you’ll be selected for that dubious honor… Some of them fall into the commonsense arena, like double-checking for mistakes. Others seem inadvisable, like earning less money. But together, they provide something of a ‘cloak of invisibility,’ albeit a less-than-fool-proof one, to hide you from the roving eyes of the IRS.1

How to Steer Clear of an IRS Audit: Helpful Tips

How to Avoid an IRS Audit

How to Avoid an IRS Audit

  • Double check your own tax return before submitting it to the IRS and your state’s tax authority. Check for simple math errors, as even these can trigger an audit. In fact, it’s not uncommon for IRS officials to assume that, if there are basic errors on tax forms, it’s necessary to dig deeper to check whether more major errors (or intentional oversights)  have also occurred.
  • Report ALL of your income, including royalties. If, for whatever reason, you have not received certain statements or financial paperwork regarding your earnings, request an extension from the IRS and wait until you have all of this paperwork before submitting your tax returns.
  • Carefully consider whether it’s in your best interest to itemize your deductions. People who itemize their deductions may be more likely to get ‘creative’ with their math. If you aren’t certain which way to go – itemize versus take the standard deductions, it’s usually safer to error on the side of caution and only report standard deductions. This is because the IRS cannot typically challenge that option.
  • If you make a lot of money and you are nearing retirement (and have several or many expensive assets), consider whether it’s in your best interests to liquidate some assets or transfer them over to your loved one(s).
  • Do NOT try to cheat on your taxes. It pays to be honest. The IRS has spent decades figuring out how people try to cheat the system and avoid paying taxes. And the consequences of being caught cheating can be harsh – and can include imprisonment, crippling fines, etc.

Get Experienced Help Avoiding (or Resolving) an IRS Audit: Contact a Denver Tax Attorney at the Shaw Law Firm, LLC

For experienced help resolving any tax issues, contact a trusted Denver tax attorney at the Shaw Law Firm, LLC. For more than 25 years, our tax attorneys have been providing comprehensive, high-quality legal services for ERISA matters, tax compliance issues and various other matters.

You can call our firm at (720) 924-1040 or email us via the contact form at the top of this page to schedule a free initial consultation with one of our lawyers and find out more about how we can serve you.

From offices in Denver, we serve individuals and businesses throughout Denver County and the state of Colorado.

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1“Audit Avoidance 101: Warding off a Visit from the IRS” published in Accounting Web, January 2005.