Gain The Highest Possible Degree Of Audit Protection From IRS Agents
Audit protection is effectively doing the best you can to stay below the IRS radar. This does not involve doing anything immoral or illegal, and indeed that is the absolute last thing you should be doing. Any attempt to mislead or deceive the IRS is virtually certain to be doomed to failure, as their computer systems have reached such a level of sophistication that any anomaly is likely to be flagged. Strangely enough, it is this very feature which also creates the opportunity to stay safe, while still using every deduction available to you.
This is the fist huge point you need to understand. IRS computers flag potential problem cases based on anomalies or discrepancies. Anything unusual is flagged for further investigation, which may lead to an audit in due course. In many cases, this will just be a simple paper audit where one or more individual items will be questioned through the mail. If you are able to justify your figures and back them up with proof, you should have no problems in coping with such an audit.
If the IRS believes that you have entered inaccurate figures, especially seriously inaccurate figures, they will order a personal audit involving a face to face meeting. This is just as likely to happen if your deductions are seriously below the expected figure as if they are seriously above. This is one of the classic mistakes people make when they are dealing with the IRS. They believe that by submitting a highly conservative return which allows for very few deductions, they are somehow going to be clear of trouble. This is definitely not the case.
There is more than one reason why you have a greater degree of audit protection while being aggressive with deductions than you have when you are being timid. Firstly, there is the method of operation of the auditors themselves. As with the vast majority of workers in modern society, they are performance driven. Meaning that they have targets to meet and pressure from bosses to meet them. They are therefore interested in any situation where they can find easy pickings. If you present them with every justifiable deduction, and the evidence that those deductions are justified, you will make them seek an easier target.
To protect yourself as fully as possible, you will need to develop a knowledge of tax forms, when they are used, and how best to fill them in. This is especially true if you are running your own business from home. Although the IRS is being more aggressive when it comes to pursuing deductions made for running a home office, legitimate deductions on Form 8829 will still pass through unflagged. Keep an accurate log of your travel and mileage as well, as accurate records are essential in giving you the highest possible degree of audit protection.
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