How to avoid an audit

Across the nation, the words "IRS audit" may be one of the most feared phrases. But with the proper preparation and record keeping, you can avoid an audit, and successfully survive one if you are audited.

While there is no way to eliminate your chances of being audited, try following some of the tips below:

• Report all of your income on the proper lines of your tax return. If the income from your W-2's isn't reported where it should be, the IRS could get confused, and ask you to clarify.
• If a W-2 or 1099 form you received was incorrect, ask the issuer to send you a corrected copy and send it along with your return.
• Make sure you report all of the income that is associated with your social security number. (W-2's, 1099's and interest payments) The IRS uses your social security number to track income attributed to you, and matches it against the income you report.
• Keep detailed records of any deductions you make.
• Don't report a deduction twice. If you are filing using multiple schedules, it may be easy to mistakenly deduct the same expense on two different schedules. Review all of your forms that you did not make this common error.
• Keep copies of all substantiating material, such as W-2's, 1099's, canceled checks and relevant receipts filed with completed copies of your return. This will make them easier to locate if you are audited.

If you do get audited, don't panic. Remember that some people are selected to be audited at random, while other selections are based on certain statistical comparisons. However, receiving an audit notice doesn't automatically mean that you are in trouble with the IRS, or that you owe them more money. It simply means they have questions on your return. Your chances of successfully surviving an audit are greater if you are properly prepared, and have supporting documents for the information on your return.

By David Plowman