IRS Tax Audits - How can I avoid them?

by M.E. Hansen, All rights reserved. Do not duplicate without permission

Disappearing from the IRS

It is simple and easy to avoid all trouble with the IRS. If you're anything like the average tax payer, you live in fear of an IRS audit. Not because you have done anything wrong, just because we all know how the government operates. Most of us know someone whom they have audited, or heard horror stories about audits. The IRS has their computers set up to spot returns that fall outside the "normal" range of deductions. Once certain entries come up outside this range the return gets a "red flag," and it gets kicked out to an agent to review. Other than that, the IRS runs random checks every few years just to see what they turn up.

It is absolutely possible to "disappear" from the IRS.

You know what they say about it being best to go easy on deductions? Nonsense. The flags that trip the IRS computers look for inconsistencies with the average return, so too few deductions can be just as bad as too many.

So many people, sometimes acting on the advice of misinformed CPAs or accountants, over pay their taxes, believing this will save them from an audit.

Big mistake.

You see, the IRS wants the easy money. They do not want to send out auditors to People who are going to fight them over every dime, and hammer out every deduction. An auditor's job performance is judged by how much they collect from taxpayers. So when push comes to shove, they want the easy prey, where they know they can squeeze out more money. So a simple, conservative return may get even more attention than an aggressive one.

Over the years, I have discovered that there are ways of "green flagging" your tax return to sail right through the IRS computers. Not only that -- you're taking every deduction you can while you're doing it!