Forbes Offers 5 Ways to Avoid IRS Audit.

A recent Forbes article by Robert W. Wood offers these 5 ways to “audit proof” your tax return.

View the entire Forbes article here:

1. Don’t claim flaky deductions.

A wise man once said “Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; there is not even a patriotic duty to increase one’s taxes.” Helvering v. Gregory, 69 F.2d 809, 810 (2d Cir. 1934).   Even so, thre are limits to what the IRS will buy when it comes to deductions.

2. Use a pro, or use software. 

tax preparation-VeroBeach-Melbourne-Titusville-FLWe at DiSalvo and Company heartily agree.  At least let a software guide you through the process to make sure you are asking all the right questions.  Forbes suggests you use one of the majors, such as Intuit’s Turbotax or H&R Block’s Taxcut.  We will say that from time to time someones asks us to have a look at the return that was prepared by a software program.  Just last week we found an oversight that let to our client receiving almost 10,000 back in additional refunds over the last few years.

In light of that, our advice would lean toward using the pro.

3. Disclose just enough.

If you report a transaction that you feel needs an explanation to be clear.  Forbes advises not to include lots of supporting documentation unless asked.  More than one taxpayer has provided the IRS with documentation which raised more questions than it answered.  They have ended up being hoisted on their own petard.

5. Account for every 1099 you receive. 

You receive IRS form 1099 for income you receive from someone for whom you are not considered an employee.  This may be work that you have done on a consulting basis.  Forbes advice makes sense.  Whoever sends you a 1099, also sends a matching copy to the IRS.  The IRS will certainly match up the 1099s reported on your return with the 1099’s they received for your tax id.   The same holds true for 1098 forms that lenders use to report interest paid.

In the final paragraph of the Forbes piece, they remind you that no matter how careful you are with your returns, there is a chance that someday you will have an appointment with the IRS, so be prepared.  Keep your returns and all of your written documentation to back up your deductions.

Disalvo CPA, a Dave Ramsey endorsed provider.If you are ever called to sit with the IRS, consider having one or the experts at DiSalvo and Company, represent you.  We have a strong track record of achieving favorable results for clients who have a dispute with the IRS.   Even if we did not prepare your original return, our knowledge of the process can often keep an inconvenient event from becoming a major financial setback for you, and your family.

View the entire Forbes article here:

DiSalvo and Company specializes in the accounting needs of individuals and small business in central Florida.  We offer all types of accounting services including, Quickbooks set-up and training, bookkeeping, payroll services, tax planning and preparation, financial auditing, representation before the IRS,  business consulting, business advisory services, forensic accounting, estate planning.

In addition to our new Vero Beach location, DiSalvo & Co. maintains offices in Titusville, and Melbourne, Florida for your convenience.  We encourage you to call us to arrange a visit to our new space for a free consultation to see if we can help your business expand in Vero Beach.

 

 

 

 

 

 

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