Nothing causes that sick feeling in the pit of your stomach faster than opening the mailbox and seeing a tax audit letter from the IRS. And now that we are in the middle of tax filing season, follow these seven simple tips to lessen the chances of having your return tagged for auditing in the coming years.
Tax Audit Tips
- The more money you make, the greater chance of being audited. This is why it’s so important to keep all your financial documentation along with hiring an experienced tax preparer, preferably one that includes “audit insurance” as part of their fee scale.
- Many folks today have a home office and it certainly is a legitimate deduction but one that the IRS pays particular attention to when included on a return. It pays to know all the IRS rules when claiming this deduction.
- Charitable contributions are wonderful and we all have them. Just make sure that you get a dated receipt for any contributions of $250 or more and any non-cash donations of over $5,000 will also require a written expert appraisal.
- It’s so important to not overlook any required information when preparing your return. This is a huge red flag that will cause the IRS to wonder what else you neglected to include.
- Business losses are common these days with the tough economy but double check to make sure they are legitimate and you have all the necessary documentation to prove this was a true business and not just a side hobby.
- There certainly isn’t anything wrong with taking every deduction you are entitled to but understand that deductions proportionally larger than your income level might end up having your return red flagged.
- Medical expenses can only be deducted if they are greater than 7.5% of your adjusted gross income and remember, things like cosmetic surgery and health club dues don’t count.
Feel free to contact us here at ILWU Credit Union if you need copies of any financial documents regarding your ILWU Credit Union accounts. We are here to help you during tax time. Call us at 866-445-9828 or stop by one of our two locations: 1134 N Avalon in Wilmington or 860 N Western Ave in San Pedro.
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