Types of audits
Once a tax return is determined an eligible candidate for auditing, the IRS will send you a letter making the announcement of an audit. The type of audit you’ll be required to do typically falls into one of three types:
Correspondence audit: The most common of audits, this typically entails mailing specifically requested documentation to the IRS.
Field audit: For individuals or businesses who’ve earned more than $100,000 in income, the IRS is more likely to send an IRS agent to your home, place of business or tax professional’s office.
Office audit: Sometimes the IRS requires you to attend an IRS facility and meet with an auditor. The factors influencing this type of audit vary.
Top Five Ways to Avoid a Tax Audit
1. Check your figures
One of the most common red flags for auditors – erroneous data entry – is also one of the most preventable. It seems simple enough to follow the advice to “double-check your return,” but surprisingly, people often are too careless regarding their taxes, said Thomas Jensen, managing partner of Vaerdi Financial in Portland, Oregon.
He advised waiting for all your income reports, bank and investment statements and other applicable financial paperwork to arrive before starting your tax return.
“Sometimes people simply forget (income) or they don’t get all of their forms gathered, and they make mistakes that are avoidable,” Jensen said.
Correctly reporting dependents and exemptions, as well as ensuring that the numbers match, is important because the IRS's automated system will easily detect discrepancies, Jensen said. "And they don’t know if that is a mistake or purposeful.”
TurboTax helps to make sure your tax return is correct by completing thousands of error checks before you file, so you can be sure it’s accurate. It also features an Audit Risk Meter™ that checks your tax return for common audit triggers and shows you