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Article #401: IRS Audits and the Percentages

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For most Americans, the mere suggestion of an IRS audit go up massively. The
of an IRS audit is enough to require the software will compare your deduction with
changing of the pants. So, what percent others in your income group and will find
chance do you have of an IRS audit? that it is rare that anyone in that
Relax; the percentages of IRS picking you income range ever makes such donations. A
for audit are very small if you have red flag will be assigned to your file
filed your taxes honestly and properly. and it is audit time. If you actually
The IRS gets a couple hundred million tax have $10,000 in charitable deductions,
returns filed every year. It does not however, this should not stop you from
have the necessary staff to audit each claiming them. You need to simply make
and every tax return. In fact, the IRS sure that you have all the necessary
audits less than 2 percent of tax filers. documents to support your claim of making
So theoretically, the possibility of you a donation in that amount.
getting audited by the IRS is very low More than employees, self-employed people
unless you attract their attention by are targets of audits as they have the
committing a few mistakes. ability to convert personal expenses in
One area where you can hurt your to business ones and put it under
possibility of an IRS audit is itemized deductions. Your car mileage and
underreporting income. For zeroing in on expenses on meals and entertainment must
possible undisclosed taxable income, the have detailed information backup. The use
IRS has devised certain criteria. The IRS of a car or truck should have detailed
has computer software that separates the logs and invoices of maintenance. Meals
suspect filers from the clean ones. It above $75 should have bills and for
also filters out filers who have claimed amounts below that, a simple entry in the
an excess of deductions, have shown diary with details of date, place and
losses for successive years and show name of restaurant and kind of
expenses disproportionate to the size of entertainment they provide, person
their business. entertained and your relationship to them
If you earn $50,000 and show $10,000 as will suffice.
charitable deductions, your possibility






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