Helping To Avoid an Audit

Ways to Keep That Dreaded Day Away From Your Customers

Besides the announcement of the death of a loved one, the notice of being audited by the IRS must be one of the most dreaded, and feared situations to happen in one’s life. As a Tax Preparer, you live with this reality on an ongoing basis and whether it’s like a lion tamer living inside the lion’s cage, you have gotten comfortable with the idea that the IRS may be lurking just around the corner.

As always we need to stay vigilant and keep our skills honed so that we aren’t caught unawares when the “lion” sees an opportunity. Here are a few ways you can check and double check that even if an audit comes down for your customers that they and you are ready for whatever may come your way.

Plan So You Preempt the Audit
As we have mentioned before and ounce of prevention is worth a world of cure. The same goes for taxes and the IRS. If your client has done something that is not normal and customary for personal or business taxes, but yet is legitimate, attach the appropriate documentation to the return that is being sent in that reflects that abnormality.Large medical bills for huge deductions, larger than normal charitable contributions, inventory depreciation… anything that could cause a flag to be sent up at the IRS, send along the accompanying proof.

Don’t Make “Any Sudden Moves”
This is especially appropriate for those who you serve who are in the self employed category. The IRS is on the look even more so this year from last year and from the year previous. So advise your customers to avoid things dealing with offshore credit card, questionable tax shelters and the tons of “tax free” vehicles that are being peddled around in the marketplace.

Measure Twice and Cut Once
While the probability of an audit being started on a mathematical mistake alone, let’s not give any reason for them to single out your customer’s return at all. Make sure when you are in the process now that you have triple checked the calculations of the figures you have been given. A sloppy return, with too many errors is bound to be snatched up in the process, and you need to be able to avoid whatever you can that you personally can. Verifying your figures is something you can directly effect.

Get All Your Ducks In a Row
I know that sounds cheesy, but it’s true. You have been around in the profession long enough that anything you put down you need to substantiate what is being claimed. Follow closely to the “T” the allowable deductions for your customers. Traditionally, auto, travel, meals and entertainment have been the items most looked at for auditing. Receipts, Receipts, and Receipts! Help keep your client organized, his records organized and if an audit does come his/her way, they will be that much more thankful for you that you did.

This is probably old hat for you, however it is always good to have a refresher once in a while so that it reawakens you to what is most important to be doing. As their tax preparer, if ever an audit comes their way, you want them that you’ve done business with to be glad that you had crossed their path.

Are You Ready For The Next Step?
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