Sloppy math, missing signatures or even typos can make your tax refund stand out—in all the wrong ways. Learn some simple tricks for avoiding a second look from the IRS.
Tax season is inevitable and can cause some financial stress—that’s only natural. As April nears, you can improve your peace of mind by taking steps to avoid an audit or any follow-up correspondence from the IRS. You may have heard that the agency is getting leaner; in fact, it’s reduced its workforce by nearly one-third since 2010, and fewer agents does mean fewer audits. But although there was a 40 percent drop in the number of audits between 2010 and 2017, there’s no reason for you to get complacent.1
As an individual, your chance of an official audit request is 1 in 160. One in 16, on the other hand, will be affected by compliance requests that don’t meet the precise definition of “audit” but can still cause headaches.2 Here are some common reasons the IRS may reach out—and how you can avoid them needing to do so.
1. Take it slow
A typo in your Social Security number or name, the wrong filing status (single/married/head of household, etc.), or an unsigned form: These mistakes are all-too-frequent and may lead to a delay in your refund or a follow-up note from the IRS. It’s better to file for an extension if you need it than to rush to hit the deadline with a return that’s marred by errors.
2. Go digital
If you make a mathematical error (think: a misplaced decimal or a handwritten “4” misread as a “9”), you may get hit with a fine. The IRS estimates people are 20 times more likely to make a mistake on a handwritten form.3 Free or low-cost tax prep software can assist with calculations and eliminate penmanship worries.
3. Keep deductions simple
Making donations to charity is a win-win: giving back is proven to boost financial confidence, and it often comes with a tax write-off. But if you are reporting hefty charitable donations, the IRS may want to see thorough documentation to back it up. What’s more, the Tax Cuts and Jobs Act of 2017 increased the standard deduction from $6,350 to $12,000 for singles and $12,700 to $24,000 for married couples.4 Translation? You may find it simpler to bundle your deductions upfront rather than itemize them individually.
4. Track all supplementary income
You’re likely prepared to report your primary income and any side hustles that result in a 1099 form. But did you know you’re supposed to report every last dollar you earn? Whether you got $300 for cleaning out your aunt’s attic or $125 for those tickets you sold online, it’s all fair game for the IRS. If you have lots of side gigs or regularly sell things that don’t “spark joy,” keep careful records throughout the year so everything is ready to disclose come tax time.
5. Keep any rollover paperwork
If you switched jobs during the year, multiple W-2 forms and moving expenses (if relevant) might complicate your taxes. You may have also opted to roll over an employer-sponsored retirement plan (such as a 401(k) or HSA) into an IRA or a plan at your new gig. Make sure you complete and submit a rollover form (1099-R), which shows the IRS that your transfer of funds was a tax-free rollover and not a withdrawal.5
Finally, you can feel more confident in your tax season prep by seeking professional help. Hiring an accountant or tax preparer can take some work off your plate and answer questions about deductions, dependents or other tax-related technicalities. Your preparer can also field any questions the IRS comes back with and may offer audit protection, which means they shoulder the financial responsibility if penalties or interest payments are assigned.6 In most cases, you can spend $300 or less on this service—that may be worth your peace of mind.7