Long Island CPAs Diapoules & Feinstein CPAs P.C. Offer Tips on Avoiding an IRS Audit

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Following an article discussing common pitfalls in the filing process that might elicit a dreaded tax audit, Long Island accountants Diapoules & Feinstein CPAs P.C. respond with some advice for taxpayers.

On February 18, 2013, Jim Diapoules of Diapoules and Feinstein CPAs P.C. provides tips for dealing with the IRS in response to a recent article discussing common “red flags” that often get filers audited.

Jeff Reeves’ recent article in USA Today provides tips on avoiding a tax audit. The article acknowledges that the Internal Revenue Service has increasingly been going after “the big tax cheats and top earners” in order to recover lost tax revenue. “But don't think you're immune to an IRS audit just because you're a middle-class working stiff,” warns Reeves.

Most taxpayers think they are unlikely to ever be audited, according to the article. “Millionaires and big corporations have a higher chance to be audited because they have a higher tax obligation. Beyond these big guys, only about 1% of individuals taking home less than $200,000 annually are audited each year.”

But since deductions are an area “rife with abuse,” says Reeves, a simple mistake could wind up earning you an unexpected audit. He lists five “red flag” mistakes to avoid when filing your return. These include being wary when claiming home office deductions or “frequent business vehicle use,” categories which are often abused. Reeves says that the IRS is more likely to audit you for these claims.

He also advises the “do-it-yourself filer” to be extra wary, and to double-check every line of their form before sending it out. “A common audit prompt is a simple mistake regarding crucial information. Maybe you mixed up some numbers in your spouse's Social Security number or forgot to carry the 2 when adding up your adjusted gross income,” reports the article.

Jim Diapoules of Diapoules and Feinstein CPAs P.C. responds to the article by stating,” Please do not be misled that just because you do not consider yourself to “wealthy” that you will not be subject to IRS scrutiny. As stated in the article the likelihood of being audited increases when you report business expenses such as meals & entertainment, home office and vehicle expenses. If you are self-employed and report your activity on Schedule C your chances of being audited increase substantially. What needs to be emphasized is that your deductions need to be substantiated and that you need to keep a diary to track your business activity and your original receipts. In most cases, charges recorded on credit card statements, unless they contain a detail of the purchase, are not sufficient to verify your deductions. We are in the electronic age and it has become easier for tax authorities to be able to verify and recreate your activities. Do not underestimate the ability of the IRS or state tax authorities to detect fraud.”

Diapoules and Feinstein CPAs P.C. have been providing accounting, auditing and tax services to Greater New York City area since 1989. D&F provides our clients with great personal attention and years of professional experience in order to see them succeed and help them to feel confident.


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