NC — Accounting firm Action 9 wants to make sure you aren’t one of the 1% audited by the IRS.
To avoid being one of the 1 million taxpayers audited come April 18, investigative reporter Jason Stoogenke offers ten bits of advice.
1. check Your Maths
Easy to check, yet an honest error can have serious implications.
Stoogenke advocates double-checking all numbers, including money, social security, math, etc.
2. Give the Exact Amount
It’s a red flag if your deductions are just numbers.
Give a precise value, such as $872 for work gas. Don’t round up.
A friend of Jackson Hewitt’s stated this is vital.
“No estimations or guesstimates. “If you have it, find it and report it on your tax return,” advised Steber.
The error rate for a paper return is 21%, and for an electronic return is 0.50%.
Caution while using your automobile as an office.
4. Many Individuals Drive to Work
Stoogenke has profiled folks who work from home, but don’t claim the car as your workplace unless you never use it for personal reasons.
5. Reporting of Expenses and Earnings
If you frequently report spending more than you earn, double-check.
Having a negative balance on your bills is questionable.
6. Medical and Dental Deductions: Beware
Remember to only deduct medical and dental expenses that exceed 7.5 per cent of your total income.
So if you made $50,000, you only deduct $3,750 in medical and dental.
Many people find ways to earn additional money, but be sure to report it.
A 1099 form is required if you make $600 or more per year.
8. Home Office Claim
Many people worked from home last year, but only self-employed or independent contractors can claim a home office.
You can’t claim it if you work for someone else, even from home.
“I have a printer. I have a monitor. My workstation, chair, and ‘Do Not Disturb’ sign are all here. But, again, I am not self-employed, so I am not eligible,” Steber stated.
9. Donation Proof
Donations over $250 require written confirmation.
Also read: South Carolina tax cuts get acclaim from both parties
10. Verify Your Earned Income Tax Credits
This is vital. According to Forbes, 40% of audits are for improper EITC.
Stoogenke advises asking yourself if you could justify each item on your return if questioned.
If you are audited, you have a way out.