By Reid Kanaley, The Philadelphia Inquirer –
Can you avoid an IRS audit by staying on the straight and narrow when preparing your tax return? There’s no guarantee, but some forethought may help you avoid hassle later.
—Audit predictors: Several factors can predict whether you’ll be audited by the IRS, suggests Jim Wang at U.S. News and World Report. The IRS has formulas, based on millions of returns, to pick out problem filings. Possibilities: Your return doesn’t match your W-2 and 1099 forms, including interest paid to you by banks; you have a Swiss bank account. And if a company paid you for a service and that company gets audited, you might find yourself under the magnifying glass, too. http://bit.ly/zhnciq
—Get it done: Being timely is important. Jeff Schnepper at MSN Money says one of the hardest things for some people is just getting started on tax paperwork. Procrastinators have to will themselves to collect the numbers they’ll need. Learning about the key tax changes from year to year is another important step, and it’s especially good to know about tax credits, which are the most potent items for legitimately reducing your final tax bill. http://on-msn.com/wpfmMQ
—Should you DIY? Mistakes are common on tax returns, the IRS says. If you insist on doing your own forms, accuracy may be enhanced by letting software do the math. Many name-brand tax-software companies allow free online federal filing (but some have surprising charges to file a state return). Via the IRS website, taxpayers with incomes up to $57,000 can use name-brand software without charge. And the IRS has free electronic versions of all its forms. The IRS options for free online filing are outlined at this page. http://freefile.irs.gov
—The IRS backs some free programs in which volunteers assist in tax preparation. These are mostly for lower-income taxpayers and the elderly, but some of the services are open to anyone. Learn more about the programs: http://1.usa.gov/zfCbUg
—More predictors. U.S. News has additional advice here on the sorts of tax write-offs that won’t pass the smell test, and other audit triggers.http://bit.ly/ApkYEC