With only a few weeks left before the tax filing deadline, taxpayers are scrambling to file their returns. Perhaps even more feared than the deadline is what may come after it: A tax audit. While the majority of Americans’ tax returns will not be subject to an audit, a small portion will.
What many people don’t know is that how you prepare your taxes may play a big role in whether you are audited. These are a few things that you may be doing to increase your chances of a tax audit.
Do you wait until the last minute to file your returns? If so, you may be on the way to an audit. This is because procrastinating—and subsequently rushing to fill in data—puts you at risk for incorrectly filling out your taxes, entering incorrect information or omitting key pieces of data. Instead, carve out a slice of time well before the deadline to complete your returns.
Filing paper returns
Electronic filing outpaced paper filing, but some taxpayers still prefer to do their taxes the old-fashioned way. What these taxpayers may not know is that filing on paper greatly increases the chances of making an error. The likelihood of making a mistake with electronic filing is 1 percent; with paper filing, it is 21 percent. Any mistakes that the IRS catches—even small ones—can flag your taxes for an audit.
Some people believe that they can provide a rough estimate of their numbers and the IRS will neither notice nor care. This could not be further from the truth. The IRS values accuracy in every single American’s taxes, and providing a fair estimate—or worse, simply guessing—could land your tax returns in the “audit” pile.