There is no surefire way to audit-proof your tax return. Nevertheless, there are numerous steps you can take to reduce your audit risk:

• Prepare your tax return by computer. A neat, computer-prepared return looks more official to the IRS classifiers and fits the IRS bias favoring computer processing. Most professional tax preparers now use computers. There are some good PC and Macintosh programs, such as Intuit’s TurboTax and MacInTax, that you can use to prepare your own return. You can prepare your return online by using TurboTax for the Web atwww.turbotax.com.
  If for some reason it isn’t possible for you to use a computer, be certain to print carefully. A messy return — cross-outs, sloppy handwriting, smudges — almost screams “audit me!” It tells the IRS that you are careless and disorganized.
• Don’t use round numbers for deductions — for example, $1,000 or $12,000 instead of $978 or $12,127. It’s an indication that you are estimating things rather than keeping good records.
• If you claim large deductions for unusual items, such as an earthquake, flood, or fire loss, attach documentary proof to the back of your tax return. Copies of repair receipts, canceled checks, insurance reports, and pictures are advisable. This won’t stop the IRS computer from flagging your return, but the documents should catch the attention of the IRS classifier who next screens computer-picked returns for audit potential. If she thinks your documentation looks reasonable, you won’t get audited.
• Avoid filing an income tax return with Schedule C, Profit or Loss for Business, that reports a net loss from a small business venture. IRS auditors go after these returns like bees toward honey.

• Report side-job income as other income on line 22 of your tax return. Try this only if the income is relatively small, and you are not claiming any business deductions against it. Technically, side-job income is usually reported on Schedule C, Profit or Loss from Business. But filing a Schedule C undoubtedly increases your audit chances.
• Don’t use electronic filing or the IRS preprinted address label on your tax return. These enable the IRS to get your return into the processing cycle, including the audit cycle, more quickly than otherwise would happen. Anything that slows down the IRS machine can’t be bad. On the flip side, however, using electronic filing or the label usually means that any refund will come faster. If you expect a refund but fear an audit, you’ll have to weigh the pros and cons.
• Live in a low audit area. Your audit chances are radically different depending on where you live. For example, Nevada taxpayers are audited four times more than people in Wisconsin. While moving your official address to reduce your chance of audit is extreme, it might make sense if you travel most of the time or have addresses in several areas. If you have flexibility in choosing your tax reporting address, choose the one with the lower audit rate. If you’re really interested in this, ask your tax pro or visit the IRS local office information reading room.

by Attorney Frederick W. Daily

With the possible exception of accountants, nobody likes taxes. But most of us recognize that our taxes are necessary to keep the country running, and pay for necessities like national security, infrastructure, education, food and drug safety, Social Security, Medicare, and so on.

As an individual, you’re responsible for paying taxes on any income that you earn. In most cases, your employer will deduct your income from your paychecks, so you’re not likely to owe much income tax at the end of the year. The important thing is to file a return on time, and to pay the taxes you owe by the deadline. If you can’t, the IRS does offer payment plans, though it will charge you interest. Here are some questions about taxes that you may need answered.

Filing Tax Returns

• What if I can’t meet the April 15^th deadline? (For information, see Filing and Paying Taxes Late.)
• What if I’m not having taxes withheld from all or some of my income? (For information, see Paying Estimated Taxes.)
• Are there certain “audit triggers” I should avoid? (For information, see How to Reduce the Chance of an Audit.)
• What should I do if I missed filing taxes one or more years? (For information, see Tax Returns: If You Haven’t Filed in a While.)
• If I’m living outside the country, do I have to file a tax return? (For information, see Filing a Tax Return When You Live Outside the United States.)

Dealing With High Tax Bills

• What happens if I can’t pay my tax bill? (For more information, see Tax Bill FAQ.)
• Can I pay the IRS the taxes owed in installments? (For more information, see IRS Installment Payment Plans.)
• Will the IRS settle for less money than I owe? (For more information, see Offers in Compromise.)
• What should I do if I’m contacted by an IRS collector? (For more information, see Top Ten Tips for Surviving an IRS Tax Collection.)
• Does it make sense to file for bankruptcy to deal with a tax bill? (For more information, see Eliminating Tax Debts in Bankruptcy.)

You may feel tempted to rebel against the system, but it isn’t worth it. The IRS is especially good at hunting down scofflaws and holding on tenaciously. If you choose not to pay taxes, or if you cheat on your taxes, you risk getting caught and suffering the consequences — which aren’t pretty.

You definitely need a tax attorney if:

• You have a taxable estate, need to make complex estate planning strategies, or need to file an estate tax return.
• You are starting a business and need legal counsel about the structure and tax treatment of your company.
• You are engaging in international business and need help with contracts, tax treatment, and other legal matters.
• You plan to bring a suit against the IRS.
• You plan to seek independent review of your case before the US Tax Court.
• You are under criminal investigation by the IRS.
• You have committed tax fraud (such as claiming false deductions and credits) and need the protection of privilege.

What you should look for

Tax attorneys must have a Juris Doctor (J.D.) degree and must be admitted to the state bar. Those are the minimum requirements for practicing law. Additionally, tax attorneys should have advanced training in tax law. Most will have a master of laws (LL.M.) degree in taxation.

Some tax attorneys also have a background in accounting. If you are facing a complex accounting as well as legal matter, you might want to looking for an attorney who is also a Certified Public Accountant.

Questions to ask

• Is the attorney admitted to the state bar?
• What does the tax attorney specialize in?
• How much does the attorney charge?
• Can the attorney help you with your tax case?
• If not, can the attorney refer you to another tax attorney who can help you?

A tax attorney specializes in working with taxpayers to solve their problems with the IRS or state revenue department. In fact, they generally focus only on tax issues and relief. A tax attorney can help a taxpayer in trouble make it through an audit, have fines reduced, liens removed, and can navigate through the minefield of small business and self-employment tax issues.

Many small business owners consider their tax attorney to be as vital as their accountant. This is because a good tax attorney can help head off tax problems before they even begin. He or she can see potential trouble spots for a business and can advise the owner how to avoid them.

U.S. tax law is not only labyrinthine in structure, it also changes nearly every year. Thus, a good tax attorney will keep up with the latest changes and can advise clients accordingly. A tax attorney may also be helpful when setting up trust funds, stock portfolios and the like, so a taxpayer doesn’t run into unexpected surprises on April 15.

A person looking for a tax attorney shouldn’t call the first one listed in the phone book. He should look around, ask friends, or even his personal attorney (if he has one) to recommend a good tax specialist. As a prospective client, the taxpayer should look for a tax attorney with extensive experience in dealing with the IRS, in debt management cases, and in working with real live taxpayers. He should also ask the attorney for references. The taxpayer should also make certain his tax attorney is a member of the American Bar Association and the state bar association. A client should also make sure he knows what his attorney’s rates are, and make arrangements for payment early on in the consultation process.

If a taxpayer finds himself in over his head where the IRS is concerned, he should certainly consult a tax attorney. Tax fines tend to snowball, and it is always in the taxpayer’s best interests to get problems solved while they are still relatively small ones. Waiting until the last minute to see a tax attorney could be extremely costly, and might result in jail time for the taxpayer, as well as higher legal fees.

Money invested in the services of a tax attorney can be considered a wise investment for a taxpayer.