What can I do to lessen my chances of being audited?

UPDATED: Aug 19, 2012

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UPDATED: Aug 19, 2012Fact Checked

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Jeffrey Johnson

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Aug 19, 2012

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

UPDATED: Aug 19, 2012

Advertiser Disclosure

It’s all about you. We want to help you make the right legal decisions.

We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.

UPDATED: Aug 19, 2012Fact Checked

The IRS typically looks for discrepancies in the following: Schedule A (itemized deductions, Schedule C (profit or loss from a business) and Schedule F (profit or loss from a farm). For Schedule A, in which you itemize deductions for such items as charitable expenses and mortgage interest, the IRS tends to audit a smaller percentage of returns where the deductions are less than 35% of adjusted gross income. If you go above 44%, your risk of audit increases substantially.

If you file a Schedule C for your business, try to keep expenses under 52% of gross income. Any expenses over 67% of income is a red flag to the IRS for an audit. With Schedule F, losses over 50% of gross farm income invite scrutiny, while losses over 71% may trigger an audit. If you file both a Schedule A and a Schedule C, add your Schedule C expenses as a percentage of gross income with 1.5 times your Schedule A expenses as a percentage of your total gross income, and keep this figure under 10% of your income.

Finally, no matter what you do, there is no avoiding a random audit. More than 150,000 taxpayers are subjected to random audits each year.

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Jeffrey Johnson

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Insurance Lawyer

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

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