LOUISVILLE, KY (WAVE)- It's tax time again, and the last thing you want to worry about is an audit. If you earn less than $200,000 per year, your likelihood of being audited is about one in 100.
Those odds go up significantly for certain types of taxpayers. People who have their own
business and itemize deductions for home office, telephone, and business meals need
to be extra careful.
Business expenses that could be personal, such as meals or travel, are one of the first
things the IRS goes after, says Consumer Reports. Keep a careful calendar of your
business meetings and hold on to the actual receipts and not just your credit-card bills.
And if you claim a deduction for a home office, be sure it looks like an office. It's best if it
does not double as a laundry or playroom.
Another red flag that can attract IRS attention is excessive charitable donations. If you
are donating 50 percent of your income, that can seem out of place. Again, make sure
to get dated receipts. They are required for cash contributions over $250 and for gifts of
goods like clothes or furniture.
You should keep your tax records for as long as the IRS can audit you, which is three
years. But just to play it safe, Consumer Reports recommends holding tax records for
And last but not least, check the math! Believe it or not, simple mathematical errors
trigger the most notices from the IRS.
If you prepare your own taxes, two of the leading programs-H&R Block at Home and
Turbo Tax-offer some level of additional help in the event of an audit. But you might
need to buy the audit protection in advance.