The IRS states that most people who
are picked for audits are selected by computer analysis, an entirely random
affair. The number of audits is low, and your chances of an audit are actually
slim. Plus, a knock-on-the-door visit from the IRS is even more rare- only
a little over nineteen
percent out of one percent of all taxpayers came face-to-face with an
auditor in 2005. In fact, you may have already been audited if you ever
received a letter from the IRS that informed you about a miscalculation
on your return. So, audits are not life threatening, but they can be horrid
if you're convicted with criminal activity.
If you're self-employed, your risk for audits may be higher because the
IRS feels that self-employed individuals are more likely to cheat on their
taxes. With the ability to take cash payments and to avoid a W-2 paper trail,
the self-employed can fudge on their returns.
You can lower your risk for an audit when you're honest about your income
and your deductions; however, even a minor change in your income or lifestyle
might trigger an audit. How can you avoid an audit, or worse, a criminal
investigation? If you're a sole proprietor, an independent contractor, a
member of a partnership, or are otherwise in business for yourself, the
following tips might help you to avoid a visit from the IRS:
Continue reading "How to Avoid Being Audited When You're Self Employed" »
