I’m a tax expert: Here’s my advice to avoid an IRS audit
Three tax filing mistakes to avoid to reduce chance of an audit
- A quarter of American taxpayers are concerned about being audited by the IRS, according to a recent poll, but financial expert Emily Shacklett has shared three mistakes to avoid to help reduce the chances of an audit ahead of the April 15 tax filing deadline.
- The first mistake would be failing to sign up for a free ID.me account. Having an ID.me account lets taxpayers see a prior year’s tax returns and track income forms that companies they worked for sent to the IRS. “That’s really important, because I see a lot of ‘matching’ errors trigger audits, which is what happens when the IRS notices that there are fewer income forms filed on a return than it received,” Shacklett said.
- She also warned people using Schedule C for business income to be accurate and truthful with deductions and expenses, as this area is frequently scrutinized due to its subjective nature. Don’t overstate your expenses as it could trigger an audit, and the IRS will likely ask for documentation to prove questionable numbers.
- And finally, Shacklett urged taxpayers to be extra clear when it comes to crypto. “Every tax season, the IRS focuses on certain areas of tax returns. This year, one of the areas is digital currency and crypto transactions,” she said. “These transactions can be complex, which means it is easy to make mistakes when entering information on a tax return.”
- Shacklett recommended taxpayers who’ve made digital currency or crypto transactions keep meticulous records and work with a professional who can help them file those transactions correctly.
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