From Eveningsnews.com
What's Your Audit Risk?
By
Mar 2, 2008, 19:18
(NAPSI)-William Howard from Raleigh, N.C., worries every year at tax time that he might make a mistake on his taxes that triggers an audit from the IRS.
Although the percentage of taxpayers who get audited yearly is very small, approximately 1 percent, the thought of the IRS knocking at their door keeps many Americans up at night.
But taxpayers can help reduce their risk of an audit by being aware of common tax situations that could raise red flags with the IRS. Below are three common tax situations that could trigger an audit from the IRS:
• Child Tax Credit
With more parents of children living apart from one another, it is becoming more common for parents with dependents to file separately. Parents who fall into this group should double-check that only one parent is claiming their child at tax time. If both parents claim a child, the second parent to file taxes will get a letter from the IRS explaining that he or she is unable to claim this deduction.
• Home office
Because the home office deduction is an area where the IRS pays more attention due to the latitude given to taxpayers, those claiming this deduction have to make sure they are disciplined in how they use their home office, and follow the rules closely.
• Moving Expenses
Taxpayers who moved to take a new job, or moved for an existing position, may be eligible to deduct their moving expenses. However, the IRS may take a closer look at a person's return to make sure certain requirements are met.
One of the best ways for a person to reduce audit risk is to use tax preparation software. In addition to checking the taxpayer's return for accuracy and providing audit support, some software will even notify taxpayers of their audit risk before they file. For example, TurboTax has a new Audit Risk Meter that scours a person's return for common audit triggers and provides the taxpayer with the explanations and information he or she needs to help reduce the risk of an audit before a return is filed.
"It was very comforting to see the Audit Risk meter and know that I was well in the green," said Howard. "It reassured me that I hadn't made any gross errors and that I didn't take any risks that would make me a high risk for an audit."
For more information on audit triggers or other tax information, go to www.turbotax.com.
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