Avoid IRS Audits
WSJ says the IRS is ramping up its audits this year, especially for high-earners. Here's some ways to duck the ax.
• Don't guess on the value on your non-cash contributions.
• Deducting big losses from what you say is a business but what the IRS says is a hobby.
• Make sure the income you're reporting matches the amount on the income forms the IRS is getting independent of your return
Another red flag are deductions high above the national average. For someone earning $50-$100k, that's $5812 in deductible taxes, $2703 in charitable gifts, and $8946 in interest. — BEN POPKEN
How to Avoid Getting Audited [WSJ]
(Photo: Ben Popken)
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Comments:
I've been audited before, the #1 way to avoid an audit is to STAPLE your forms together where it says they should be stapled. I merely paper clipped my forms (and check) together, and was audited my first year out of college.
If you mail it, staple it!
I protest the absence of any cats in this photo : (
Nice to know the national average on charitable deductions. We tend to donate around $1500 of stuff each year, and I was wondering whether we should do a big push in 2007 and donate all the stuff we still have left. I don't want to get the IRS's attention!
I have been giving 10k for about 4 years now to charitable deductions...about 8500 of them I get something from the place...I would say the best way to avoid a audit is do not deposit large sums of money into your bank accounts unless you plan on reporting it because the bank reports anything over 5k to the tresry dept. and not take large sums of money out in cash and dont buy an new bmw 750i in cash because they have to report it as well..if all your w2, 1099m and I match and any cap gains or loss are all documented you have a greater chance not being audited. When you are in a all cash bus. then you have a 50-50. But if you make lets say 50-100k sal and run into alot of medical bills they know how much you have in ira/401k and savings since the bank reports it and then you are claiming you paid 30k in medical and you never had 30k saved they want to know where you got it...and it you took a loan they know that too unless its from a friend or family and not a gift.
$2703 is the national average for charitable gifts?!?!? I'd love to see this broken down by income level; I have a feeling the Bill Gateses of the world are skewing this number just a bit.