Typically, one of the immediate reactions after receiving an IRS audit letter is waves of panic. While there are no guarantees the agency won’t ever contact you, a few proactive steps may minimize your chances of receiving a notice. Michael C. Davis, CPA CGMA in Stow, OH continues to help clients from all walks of life with responding to IRS audit letters and other professional tax return preparation and bookkeeping services.

In addition to providing income tax planning strategies designed to get you the most tax credits, the local firm offers compliance tips to help you avoid audits. Here are just a few red flags bookkeeping and tax experts want you to be aware of:

• Inputting Wrong Figures: One common way to raise alarm bells is Social Security numbers, birthdates, and other key figures that don’t match up with what’s on file with the IRS. It pays to double-check numbers and income amounts.
• Not Reporting All Income: Taxpayers are required to report all taxable income. This includes earnings from W-2s and 1099s, which are typically provided to freelancers and self-employed persons. Because employers are required to submit these forms to the IRS, the agency will know if a taxpayer failed to report all their income.
• Owning a Business: The IRS is likely to scrutinize small businesses because of the temptation to not report all income earnings on their Schedule C forms. Sole proprietorships and businesses that deal in cash transactions may get a second or third look to spot any suspicious activity.
• Questionable Donations: While it’s a gracious gesture to donate to charity, the IRS may flag unusually large contributions. The donations might stand out to auditors if the taxpayer’s income doesn’t align with the amount sent to the charitable organization.
• Math Mistakes: Figures that don’t add up are also common audit triggers. All calculations should be double-checked for accuracy. This includes income earnings that impact any tax credits the filer may be eligible to receive.

An IRS audit notice doesn’t have to mean doom and gloom. Partnering with a professional and experienced tax help firm is an effective way to prepare for the meeting. Whether you’re an individual or business taxpayer, a licensed agent will hold your hand through the entire audit process.

Let the office of Michael C. Davis, CPA CGMA earn your loyalty. Should you need personalized assistance in responding to an audit letter or other bookkeeping services, call the office at (330) 376-1099. Visit the website for information on their customized tax return preparation services.