CHARLOTTE — Taxes are due in a couple of weeks and while the IRS only audits 1% of taxpayers, Action 9 wants to make sure you’re not one of them.
Investigative reporter Jason Stoogenke has 10 pieces of advice to help you avoid being part of the 1 million taxpayers who will be audited once taxes are due April 18.
1.Double check your numbers
2. Give the exact dollar figure
This is the easiest one to check, but an honest mistake can bring grave consequences. Stoogenke advises you to check every number, whether it’s dollar figures, your social security number, your math — everything.
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If your deductions are all nice, neat numbers, it’s a red flag.
Give the exact figure, for example, $872 for gas for work. Don’t round up to $1,000.
Mark Steber works with Jackson Hewitt and said this part is crucial.
“No guesstimates, no estimates. If you know you have it, you need to find out where it is and put it on your tax return,” said Steber.
3. File electronically
Turbo Tax says the error rate for a paper return is 21% and for electronic returns, it is 0.5%.
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4. Be careful with claiming your car as your office
A lot of people use their car for work.
Stoogenke has done reports about people whose car is their office, but don’t claim the car 100% for business, unless you truly never use the car for personal reasons.
5. Accurate reporting of spending and earning
If you consistently report that you spend more than you earn, make sure that is actually true.
It looks suspicious if you’re constantly coming up negative on your expenses.
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6. Be careful with medical and dental deduction
If you deduct medical or dental expenses, remember it’s only the amount beyond 7.5% of your gross income.
That means if you grossed $50,000, you only deduct medical and dental over $3,750.
7. Report extra income
A lot of people find ways to make extra money on the side, but make sure you report it.
If you make $600 or more from the same job, you should get a 1099 form.
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8. Claiming home office
Last year, a lot of people worked from home, but you can only claim a home office if you’re self-employed or an independent contractor.
If you work for someone else, you cannot claim it, even if you work from your living room.
“I’ve got my printer. I’ve got my monitor. I’ve got my desk, my chair, my ‘Do Not Disturb’ sign on the door. But, I, again, do not qualify because I am not a self-employed person,” said Steber.
9. Proof of donations
If you donated more than $250, you need to have written proof.
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10. Earned income tax credits
Make sure your earned income tax credits are correct.
This is crucial. Forbes says incorrect earned income tax credits account for 40% of audits.
Stoogenke advises that for each item on your return, ask yourself if you could defend it if you were asked to do so.
This way, even if you are audited, you have a way out of it.
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