No one will beg for an IRS audit of tax return, and you can do certain things to reduce your chance of being selected. Before you start working on your tax, take a look at some tips offered by Andrew Blackman from WSJ.
In case you don't have access to WSJ Online, here is a quick summary:
- Use a professional. A true tax pro will examine your tax return and avoid obvious errors that will catch the eyes of IRS staff.
- File electronically.
- Report all income. Make sure you don't miss any income -- IRS will get the information from all banks and brokerage firms.
- Lose the hobby. Many tends to "take a deduction for business expenses or losses related to a part-time activity that never makes money." Sooner or later, IRS will question if you really operate a genuine for-profit business.
- Watch deductions. You are more vulnerable if your deduction amount is not in line with your income. For comparison: "The average amount claimed by people who took the deduction for charitable contributions in 2002 was $2,530 for those with adjusted gross incomes of between $50,000 and $100,000, according to CCH Inc. The average deduction for medical expenses in the same income bracket was $5,672, for interest it was $8,364 and for taxes it was $5,173."
- Listen to the IRS. These years, IRS is concerned about topics like charitable donations for cars, home office deduction and alike. Be sure you have a strong case to back your claim.
Fear Of Tax Audit? File An Extension(February 24, 2005)
Kerry M. Kerstetter, the tax expect and blogger behind Tax Guru-Ker$tetter Letter, believes that "the later you file your tax return, the less likely you are to be selected by IRS for audit." He mentioned this is statistically proven in Amir D. Aczel's book "How ... Read
Be On The Lookout For These Tax Statements(January 23, 2005)
Another timely article from Bankrate reminds us of the tax forms we should collect -- no matter we decide to file by our own or use tax pros. Below is a quick breakdown: Read
January Tax Prep Tips(January 14, 2005)
April 15 is still far off, but if you start taking action now, you may save yourself a lot of trouble in the last minute. Enjoy these timely advices from MarketWatch.com. Read
Sales Tax Deduction Details Released(December 18, 2004)
Back in October, I reported that in 2004 and 2005, people can claim state sales tax deduction form their federal income tax forms. This new law especially benefits those who live in the states of no state income tax, namely Alaska, Florida, Nevada, South Dakota ... Read
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