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