CPA-attorney Mark J. Kohler shares three ways to reduce audit risk: use exact deduction amounts instead of round numbers, match your expenses to what others in your industry claim, and file your return even if you can't pay the full tax bill right away.
Hi, Mark Kohler here with another tax and legal tip I'd like to talk about three ways to avoid the dreaded IRS audit. It sounds easy, but use exact numbers. Don't round up to the nearest hundred or $2,000. If you're going to write off $400 in dining, you're going to draw attention to that. Make sure it's accurate and $397.22. Who has $400 in dining in any given year? Use the exact number. Number two, Avoid suspicious or high numbers. If you're in an industry that doesn't require a lot of travel, don't slap in there $15,000 in travel expense. Know what your industry average is? A Realtor is going to have more mileage. A dentist is going to have more rent. Make sure that you look at the average for what your type of business would have in that area. Now your CPA or tax preparer is going to help you identify those issues. And this is where you've got to be careful if you're trying to knock out your own tax return. Number three, make sure you file your tax return even if you can't pay the tax. This is one of the fastest ways to get an audit if you don't file. Now I know some of you may not have the money to pay for your tax bill this year and so you get stressed, you go into hiding. You take the ostrich strategy and think, hey, if I put my head in the sand, the IRS is just going to go away or not. Notice me folks. That's not the case. Make sure you file your tax return. In fact, the penalties are less for filing and not paying than not paying at all. Stay in touch with the irs. They want to know what's going on. In summ, if you like these tips, I've got 10 tips on how to avoid an IRS audit in my new book, the Tax and Legal Playbook, a whole chapter on this topic. I know you want to save taxes, but we want to avoid that dreaded letter from the irs. So read up on this, keep studying, talk to your tax advisor and keep living the dream. Thanks for listening and I hope that information was helpful. And let me speak from the heart here. I've been talking about topics like this for 1015 years. I'm a CPA attorney, best selling author, radio show host and I am passionate about helping small business owners save taxes, build wealth and protect it. Please check out the link right here. Download my free ebook on 10 Common Mistakes Small business owners make in the tax and legal arena. Also check out my social media links here. I've got Daily Tips, a weekly blog radio show every week. This information is free and I'd love to help you. Click below. Find out more about me and thanks for listening. Sa.
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