Avoid IRS Tax Audit

How To Avoid An IRS Tax Audit

DIF or UIDIF Triggers an IRS Audit

An IRS tax audit is triggered by the IRS’s computer center after running through the IRS “Discriminant Function” program called “DIF” or Unreported Income Discriminate Index Formula (UIDIF) program. These programs spit out tax returns for review separating those taxpayers that are worth pursuing for more taxes and those that are not based on DIF and other scoring metrics. About 2% are reviewed by humans, and about 1% are audited. No one understands exactly how these programs work but below we will describe some things to watch out for. Realize the IRS typically cannot audit a return more than 3 years old from the filing date.

Ways To Avoid An IRS Audit

There is no guaranteed way to avoid and IRS audit but there are things a taxpayer can do to lower their probability or propensity of being audited:

1. Check Your Deductions – This means more than making sure your math adds up as a tax return with a few math errors usually doesn’t trigger an audit especially if you used a tax filing program like Turbotax. Don’t take large deductions on medical expenses (only expenses over 7.5% of adjusted gross income are deductible) and inflate charitable donations if untrue because the IRS programs will be comparing your deductions to taxpayers or businesses (if reported for a business) in your income bracket based on your location, family size, and profession. Lastly, make sure all your expenses itemized make sense. For example, don’t claim excessive travel expenses if you work from home.


2. Check Your Income to Expenses Percentage – The IRS is looking for individuals with high expenses and low income which is inconsistent to the averages in your category. Some notable experts such as Amir Aczel will argue that itemized deductions should rarely be more than 35% of adjusted gross income on Schedule A and up to 52% of revenue with a Schedule C (filled out by businesses). If they exceed these numbers, and you are truthful, that is fine, just make sure you have supporting documentation.

3. Report All Income – Report all bank interest, capital gains on stocks, real estate, gambling’s, alimony payments and any other potential income sources (even foreign accounts). Realize that the IRS receives 1099s and those need to match up with what you are reporting as income.

4. Include All Necessary Schedules and Fully Complete Your Tax Return – If you failed to fully complete your tax return or failed to include necessary schedules this may trigger an IRS audit.

5. File A Tax Return – If you didn’t file a tax return it doesn’t mean you can’t be audited. In fact the IRS may file a “Substitute of Return,” on your behalf (which is not good because credits and deductions are kept a a minimum typically) and then audit the return they filed for you.

6. Avoid Rounded Numbers – Rounded numbers are unrealistic, and usually will cause the IRS programs to select your tax return for review. Don’t wing your tax return, the IRS and State taxes are not a joke and should not be underestimated ever.

7. Avoid Running Into The Law – Don’t break the law, because if you are arrested for drug possession/intent to sell, or some other illegal activity this could trigger a review of your tax returns.

8. Avoid Claiming False Dependents – If you are divorced realize that only one parent can claim any child as a dependent. Make sure that your ex-spouse is not claiming your child as a dependent.

Other Causes Outside Your Control That Increase Audit Probabilities

1. Cash-Based Income Professions: If you are in a certain profession, like being a waiter, hair-stylist, tax driver, deli manager, or any profession where income is largely based on cash, your chances of being audited are much greater.

2. Self-Employment – If you are self-employed, you are much more likely to be audited because the IRS knows that many individuals will claim business expenses that should be personal expenses. Don’t try to expense huge business travel expenses, entertainment, or a large home office deduction.

3. If You Make More Than 100k a Year – Statistics and professionals will argue that a person who is making more than $100k a year is much more likely to be audited than someone who is making less.

4. Businesses That Report Small Losses – Businesses that report losses are typically targets for the IRS especially those with small losses because an Audit has a greater potential of producing income if incorrect.

In summary, these are just a few things to consider when trying to reduce your probability of being audited including other factors. Realize that there is no sure fire way to avoid an IRS audit only things you can do to lessen your chances. If you are faced with an IRS tax audit, or need representation fill out the form on the right for a free quote or give us a call today for a free consultation.

Tax Relief Process

What is the Tax Relief Process

Get Answers! 100% Free Tax Consultation Right Now

If your concerned about being audited by the IRS and you feel you are at high risk, you need professional ANSWERS you can count on. But how can you get this information without paying a lot of money? You don’t have to!  We offer a 100% free tax help consultation. One of our honest, licensed professionals will evaluate your situation and provide you with the answers you need, so you can have the peace in mind and security of understanding your options.  Chat with us live right now or call us if you prefer.  We are NOT sales people, we’re true tax professionals.

Why Thousands Have Chosen the W Tax Group

Licensed Tax Professionals

At the W Tax Group you will be working with Certified IRS agents, Licensed Tax Attorneys and or Certified Public Accountants. We're not a sales team, we're an authentic tax firm with the qualifications and experience necessary to help you!

Tax Filing Security

We understand that tax issues can be very personal. All of our interactions with you are 100% respectful and private. Your information is safe. Our website is protected with full encrypted security. We have internal processes to keep information you provide to us safe as well.

The W Tax Group BBB Business Review

A reputation is important and the BBB provides the most respected evaluation process in the industry.  The W Tax Group has consistently maintained an A+ Rating with the BBB.

Customer Reviews and Ratings

Real Customer Reviews of Tax Services

We understand that facing a tax issue can be very concerning. Please take heart and rest easy knowing that what you are going through is something that has been solved for others many times before – and we’re now here to do the same for you.

Get Private, Live, Sincere Help Right Now for Free

We would love to help you solve your tax problem right away. If you’re ready you can
call us or chat with us by clicking on either icon below

Get updates on the latest tax relief programs and practical tax preparation advice

About Our Free Services And Fees For Our Paid Services

The W Tax Group believes in total transparency! You deserve to know exactly what you receive for free and what is a paid for service. Here we clarify both:

Initial Consultation - FREE:

There is no cost for your free initial consultation.  No credit card is required, no deposit, NOTHING. Although free, this consultation is detailed and thorough. We will answer any questions you may have. We will collect any documentation or information you have personally to help assess the situation you are in, in order to provide strategic direction on how to solve the tax issue at hand. At the end of your consultation you will have a solid grasp on the potential solutions to solve your tax issue.

IRS Document Retrieval and Analysis - FEE

After your initial free consultation you will have the opportunity to move forward by having us obtain and review all tax documentation the IRS has on you.  We are completely transparent about offering this service, it will be explained to you and you will be asked to approve it by signing off on the service and providing a means of payment. Your IRS document analysis involves requesting all documentation from the IRS and or State taxing authority. This information will be reviewed by the appropriate licensed tax professional here at the W Tax Group. After careful review and analysis a more accurate view of your situation can be determined and thus a more accurate solution to successfully solve it can be presented to you.

  • This IRS Review, Analysis and report to you has a fee of $500.
  • We offer a 15 day 100% money back refund of this fee if you are unhappy with the service.

Tax Resolution Program - FEE

The range of tax solutions and the work necessary to conduct them is wide. Only after we have conducted the IRS document retrieval and analysis can we determine the proper resolution, work necessary to execute on the resolution and thus the price required for conducting your resolution all the way through to success. You can be completely assured however, that once your Tax Document analysis has been completed, we will provide you with a cost estimate, explain it to you and it will be entirely up to you to approve and move forward.

If you choose not to implement the solution, you can walk away and will only have paid the small fee for IRS document collection and analysis.

If you choose to implement the program you will be given a total cost estimate and a payment plan if necessary to pay for services.