What Are Best Practices When Filing Taxes If You Want to Avoid Being Audited?


Quick Answer

Best practices to avoid audits when filing taxes include paying attention to mundane details and being precise with figures, reports AARP. Other important considerations are reporting all income and being accurate when claiming deductions for home office, use of vehicles for business and business entertainment, states USA Today.

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What Are Best Practices When Filing Taxes If You Want to Avoid Being Audited?
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Full Answer

Repeated carelessness in basic information such as home or business address, Social Security number and taxpayer's signature focuses IRS attention on a tax return and subjects the taxpayer to possible fraud penalties, according to AARP. To avoid IRS attention, it's important for taxpayers to report precise figures and not round out numbers.

Taxpayers should report all sources of income, including freelance projects, temporary work, bank account interest and investment income, reports Market Watch. If the income a taxpayer reports doesn't match income reported to the IRS on 1099 forms turned in by employers and clients, the IRS is likely to audit the taxpayer.

The IRS commonly audits those who claim deductions for exclusive business use of a home office area, reports USA Today. The taxpayer must use the space as a home office only and not allow part-time use as a bedroom, play area or storage area. Those who claim deductions for business use of a vehicle must keep detailed logs of vehicle activity and include in the deduction trips made for business purposes only. Taxpayers must keep careful records of business entertainment expenses as well, as the IRS monitors deductible entertainment expenses carefully.

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