Simple Tax Tips to Help You Avoid an Audit; A Common-Sense Guide to Cutting Your Risk of IRS Trouble

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If you’re worried about a tax audit, put your mind at ease by making sure your return is free of careless errors.

If everyone would take a few minutes to proofread their tax returns, a huge number of tax audits would be avoided.

IRS audits have been on the rise for more than a decade, and with another enforcement budget increase proposed for 2011, the trend will continue. Here are some simple tips to help you avoid becoming one of the millions of individuals who are contacted by the Internal Revenue Service this year.

Avoid One-Digit-Disasters by Proofreading Your Return

It’s important to check every item on your return, including social security numbers, addresses and other personal information. In reporting income and withholding, a mistake in just one digit can lead to disastrous results.

“Unfortunately, it’s a common practice for folks to file their tax returns without ever reviewing and verifying that all the entries are correct. The mistakes we see most often on tax returns selected for audit are data entry errors,” says Mark Olander, Executive Vice President of TaxResources. “If everyone would take a few minutes to proofread their tax returns, a huge number of tax audits would be avoided.”

If It Seems Too Good To Be True, It Probably Is and You’d Better Check It Out

If you’re used to receiving a small refund but all of a sudden this year you are getting $20,000 back, don’t quit your day job. It’s likely there’s a mistake and the IRS will want their money back in a year or two, along with interest and penalties. If there’s a big change in the bottom line of your return – in any direction – compare your prior year’s return, line by line, with your current return and identify the areas that changed. This should help you to determine why your overall taxes are different and find any mistakes.

Don’t Rely on the Software (Or Your Tax Professional) Too Much

If you are using interview-based tax software, it’s up to you to verify the accuracy of your tax return by printing it out and checking the entries against your source documents. Blaming your tax software for your mistakes will not relieve you of paying penalties. More than once the U.S. Tax Court has ruled that reliance on tax software does not establish reasonable cause for penalty abatement.

The same is true if you pay a professional to prepare your taxes. Recent government studies show that commercial tax preparers often prepare incorrect returns with tax consequences that are sometimes significant.

If You Receive an Audit Letter

If you receive a letter from the IRS, do not let fear paralyze you. Of all the tax mistakes you could make, ignoring the IRS is the worst of all. A matter that might be simple to clear up could turn into a financial disaster if it isn’t dealt with properly. Responding to the IRS in a timely manner will save you money, and the assistance of a qualified tax professional will ensure that you respond correctly.

About TaxResources

With more than twenty years of experience, TaxResources, Inc. is the nation’s oldest and most skilled audit representation firm and is the provider of TurboTax Audit Defense. Recognized as a leader in the industry, TaxResources is committed to providing the best income tax audit representation and the best taxpayer education available. To learn more about income tax audits and Audit Defense membership plans, visit

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Karen Reed
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