Don't Audit Your Own Tax Return
Editor's Note: This article is part of our 2014 Tax Tips series. Robert Flach is an expert with more than 40 years of experience as a tax professional and also blogs as The Wandering Tax Pro.
NEW YORK (MainStreet) I have seen several articles and posts recently that warn taxpayers to avoid IRS "red flags" tax deductions that could increase your chances of being audited.
Do not fail to claim a legitimate and documented tax deduction just because you read somewhere that it is an IRS "red flag" and claiming it will substantially increase your chances of being audited.
If you fail to claim a legitimate deduction you have, in effect, audited your own return and disallowed the deduction neither of which the IRS might actually do. If your deduction is legitimate and you have sufficient documentation to prove its authenticity then what is the problem?
Just because the IRS pays closer attention to tax returns that contain certain deductions does not mean if you return contains any of these deductions you will be audited. The IRS only audits a very small percentage of 1040s according to IRS statistics for 2013 only about 0.96% of individual income tax returns filed were audited - and several factors are involved in determining which returns are selected for audit.
If you are one of the very few who are selected for an audit by the IRS or state tax authority, or receive any correspondence from these guys, the first thing you should do is immediately send the notice or correspondence to your tax preparer.
--Written by Robert D. Flach for MainStreet