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Avoiding common tax errors to reduce audit chances

On Behalf of | Aug 4, 2017 | Tax Audits

There are several common mistakes that some Georgia residents make with their tax returns that could lead them to be targeted for audits. By avoiding these errors, taxpayers may reduce their chances of being selected for audits. If they are facing audits, they may want to get help instead of trying to represent themselves.

The IRS computers look for the use of perfectly round numbers on tax returns. If taxpayers use multiple round numbers, they are likely to be audited. For example, claiming that an itemized expense was exactly $1,000 may catch the interest of the IRS. People should avoid using this kind of estimate.

Taxpayers who have debts that have been forgiven are required to report the amounts that were canceled as income in most cases, but there are some exceptions. They may want to familiarize themselves with the rules so that they understand the correct amounts to report. Taxpayers must also report gambling winnings. While gambling losses are deductible, they may only be deducted if they are itemized and only up to the amount that has been won.

When taxpayers receive notices that they have been selected for audits, they should not panic. They might want to consult with tax law attorneys to get guidance on how they might best defend themselves. Experienced attorneys may review the notices and their clients’ documents in order to determine whether or not errors were made. They might work to resolve their clients’ tax problems by negotiating for their clients with the IRS. It is important for taxpayers to understand that the IRS wants to try to collect as much as possible from them and may use technicalities to secure higher dollar amounts and additional penalties. An attorney may help to negotiate down some of these extra amounts.