5 tricks to reduce your tax auditing chance.

No matter you like it or not, tax will be the biggest financial burden everyone could face. While we all have to report an honest and accurate tax filing every year, it 'd be nice to reduce the chance of seeing ourselves being audited by IRS. It's stressful to deal with and likely you end up paying penalty if they found you've missed reporting some income here or there. So how do we reduce our tax auditing chance? Few weeks ago, I have a dinner with a friend who is a certified tax consultant. He share with me 5 great tricks everyone can do to reduce audited chance. Check it out
1)No rounding number. EX: You have item X want to claim as expense. If you report this item X cost you 100 dollar, IRS know you're most likely just estimating. But if you put 97.32 for the item X, IRS will believer more this is the true cost you pay
2)Get extension. The rational is IRS assigned majority of their tax auditors for the regular tax season. Only quite few limited auditors are assigned for the extension period. And therefore, your chance being picked is reduced
3)Make it as a biz. Most auditors are familiar with personal 1040, the most basic tax form employee fill out. Not all auditors (especially the newbie) are not familiar with LLC, LP, S-crop or whatever complicated business structure you've. Auditors are just human, they won't bother to look at stuff that they not know very well
4)Keep number in line with national average. EX: you bought a desk for your office, and want to claim it as itemized expense. It's pretty normal to say this cost $89 bucks, but not $890 dollar
5)Keep all your receipt. In case you do get audited, when auditor see you've such a complete receipt and record, he knows that you're most likely honest with your tax filing and move on to next less organized target.
It makes sense to me, does it make sense to you?