Thousands of Americans file their taxes in fear that every step of the process could potentially lead to an IRS tax audit. While it is true that certain red flags could make an audit more common for some individuals, there are numerous myths that seem to appear each tax season. It is important to identify this misinformation and accurately complete a return without fear.
Whether perpetuated by popular media or through the anecdotes of friends and family, several myths center on the possibility of an audit, including:
- Electronic filing increases the chances of an audit: This myth likely began decades ago when the technology was still new. In fact, the IRS expects about 80% to 90% of their returns to be transmitted electronically this year. It is often the case that e-filing could reduce the likelihood of an audit as the software identifies mistakes and highlights errors that could otherwise lead to a rejection or investigation by the IRS.
- The IRS designed in-office audits to be uncomfortable: Many people conjure up the image of a police interrogation – bright lights, nondescript rooms, intense discussions. In fact, the IRS handles most audits by mail correspondence. Many times, the IRS triggers an audit for clarification and simply needs to review additional documentation. An in-person conversation, whether the IRS comes to the individual, or the individual must go to a branch office, will likely be a drama-free meeting.
- Anything other than the standard deduction will trigger an audit: The problem, here, is that individuals likely embellished their own stories. It is not deductions that get people into trouble … it is unsubstantiated deductions, unrealistic donations or underreported income. As long as the deductions are legitimate and can be backed up with documentation, an individual will likely have nothing to worry about.
An IRS tax audit can be an intimidating, overwhelming experience. Many individuals fill out their tax returns in fear of making a mistake that somehow raises a red flag in the IRS computer. To avoid an audit, most people need to do nothing more than answer truthfully and be accurate. If an audit becomes a reality, however, it is often wise to seek the counsel of an experience professional.