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.