IRS audit
 
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Ways to reduce the chances of IRS audits (continues...)

Do not use rounded numbers on the tax return.

The IRS is aware that a tax return that contains rounded tax numbers such as $200 for charitable contributions, $500 for office supplies is likely to be an approximation that cannot be supported during an IRS audit.

The IRS audits these types of tax returns more frequently than other tax returns because the IRS audits are almost certain to result in additional tax revenue for the government. Use the actual amount of expenses on tax returns.

Check tax returns carefully for math errors

When the IRS receives a tax return, the tax return is checked for math errors and other numerical errors. If the IRS computer finds a math error on the tax return, the error will be corrected. However, numerical errors on tax returns give the IRS a reason to look at the tax return in more detail. All tax payers should try to limit the number of reasons and time the IRS has to look at a particular tax return.

File the tax returns as close to April 15 as possible or get an extension to file in August or October

The IRS denies that filing tax returns close to April 15 or asking for tax filing extension will reduce the chances of IRS audit. However, it is likely that filing near April 15 will reduce the chances of IRS audits. This is because nearer to April 15, the IRS will receive a large number of tax returns and if the DIF score is higher than the national average at that time, the IRS may not stick out as much as it would if the return was filed with only a few other returns. The IRS compares any tax return with what the IRS considers standard or normal usually national average.

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