# Avoiding IRS income tax audits **URL:** \ **Category:** Factual Questions\ **Created:** [April 19, 2017, 1:40pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788 "2017-04-19T13:40:41Z")\ **Posts on this page:** 20\ **Page:** 2
**Author:** ![watchwolf49](https://avatars.discourse-cdn.com/v4/letter/w/e9c0ed/32.png) [@watchwolf49](https://boards.straightdope.com/u/watchwolf49)\ **Post date:** [April 19, 2017, 6:56pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/21 "2017-04-19T18:56:33Z")
> [@August\_West](#): > > The letter stated something like “If the amount listed above is less than 1 dollar, you do not need to pay”. > > I sent them a check anyway. You wrote them a check for 37¢ … hahahaha … well done my friend !!! ---
**Author:** ![Lemur866](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lemur866/32/434_2.png) [@Lemur866](https://boards.straightdope.com/u/Lemur866)\ **Post date:** [April 19, 2017, 8:34pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/22 "2017-04-19T20:34:40Z")
> [@SpoilerVirgin](#): > > What if you don’t itemize? I’ve always assumed that because I never itemize, I would be very unlikely to be audited. But I can’t find anything online specifically saying this. Most sites just talk about the types of deductions that increase your audit risk. > > Does anyone know how likely you are to be audited if you never itemize? The thing about an audit, is that the IRS auditor goes over all your claimed numbers. But if you just have W-2 income and standard deduction, there’s no numbers to dispute. So there’s no point to an audit. ---
**Author:** ![Max\_Torque](https://avatars.discourse-cdn.com/v4/letter/m/e9bcb4/32.png) [@Max\_Torque](https://boards.straightdope.com/u/Max_Torque)\ **Post date:** [April 19, 2017, 8:47pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/23 "2017-04-19T20:47:01Z")
> [@watchwolf49](#): > > You wrote them a check for 37¢ … hahahaha … well done my friend !!! Reminds me of the time, when I was in college, that the phone company messed up and attributed my payment for a slightly incorrect amount, meaning that the next month I got a bill for seven cents. I decided to just let it ride until next month. The following month, I got a bill warning me that I was late in making a payment, and was being assessed a penalty of…four cents. _And I had better pay right now!_ Rather than face the wrath of the phone company, I wrote and mailed a check for eleven cents. The stamp was worth more than the check. And when I got my bank statement, sure enough, they had processed my eleven-cent check. ---
**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\ **Post date:** [April 19, 2017, 9:02pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/24 "2017-04-19T21:02:00Z")
> [@Lemur866](#): > > The thing about an audit, is that the IRS auditor goes over all your claimed numbers. But if you just have W-2 income and standard deduction, there’s no numbers to dispute. So there’s no point to an audit. No numbers to dispute except that weekly deposit of $5,372 in your checking account when the only income you reported was your $200/week salary. ---
**Author:** ![Musicat](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/musicat/32/20189_2.png) [@Musicat](https://boards.straightdope.com/u/Musicat)\ **Post date:** [April 19, 2017, 9:09pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/25 "2017-04-19T21:09:14Z")
> [@Max\_Torque](#): > > Reminds me of the time, when I was in college, that the phone company messed up and attributed my payment for a slightly incorrect amount, meaning that the next month I got a bill for seven cents. I decided to just let it ride until next month. > > The following month, I got a bill warning me that I was late in making a payment, and was being assessed a penalty of…four cents. _And I had better pay right now!_ Creditors have gotten smart since. Instead of accepting late payments as an unavoidable business expense, they have decided to make it a profit center. Nowadays you are more likely to be charged a $35 penalty and a $5 processing fee for your 7 cent delinquency. ---
**Author:** ![Machine\_Elf](https://avatars.discourse-cdn.com/v4/letter/m/82dd89/32.png) [@Machine\_Elf](https://boards.straightdope.com/u/Machine_Elf)\ **Post date:** [April 19, 2017, 9:26pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/26 "2017-04-19T21:26:00Z")
> [@watchwolf49](#): > > ETA: Be very careful about listed property … As opposed to unlisted property? Why? I have a home-based small business, and every year I end up buying (and deducting) some listed property and some unlisted property. Why does the IRS distinguish between the two, and why would they give extra scrutiny to deductions of listed property? ---
**Author:** ![bobsmom101](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bobsmom101/32/2867_2.png) [@bobsmom101](https://boards.straightdope.com/u/bobsmom101)\ **Post date:** [April 19, 2017, 9:27pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/27 "2017-04-19T21:27:45Z")
Supposedly, the IRS scrutinizes returns with refundable credits (e.g EIC, child tax credit) very thoroughly, especially if the amount is large. Sent from my SM-T350 using Tapatalk ---
**Author:** ![Tranquilis](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/tranquilis/32/3639_2.png) [@Tranquilis](https://boards.straightdope.com/u/Tranquilis)\ **Post date:** [April 19, 2017, 10:04pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/28 "2017-04-19T22:04:42Z")
> [@Cardigan](#): > > What are the best practices for ‘small fish’ (like me) to avoid an IRS audit? Or to put another way - what not to do that might increase chances of getting an audit? There is never a 100% guarantee - Random audits happen. That said, keep your taxes simple - avoid large or exotic deductions - and file & pay on time. It really is that easy. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 19, 2017, 10:17pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/29 "2017-04-19T22:17:49Z")
> [@Machine\_Elf](#): > > As opposed to unlisted property? Why? I have a home-based small business, and every year I end up buying (and deducting) some listed property and some unlisted property. Why does the IRS distinguish between the two, and why would they give extra scrutiny to deductions of listed property? Because you can and often do use listed property for personal use, while claiming 100% for business. ---
**Author:** ![Fubaya](https://avatars.discourse-cdn.com/v4/letter/f/c2a13f/32.png) [@Fubaya](https://boards.straightdope.com/u/Fubaya)\ **Post date:** [April 19, 2017, 10:49pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/30 "2017-04-19T22:49:01Z")
> [@Alley\_Dweller](#): > > No numbers to dispute except that weekly deposit of $5,372 in your checking account when the only income you reported was your $200/week salary. Does the IRS have access to your checking account? ---
**Author:** ![markn\_1](https://avatars.discourse-cdn.com/v4/letter/m/f9ae1b/32.png) [@markn\_1](https://boards.straightdope.com/u/markn_1)\ **Post date:** [April 19, 2017, 10:49pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/31 "2017-04-19T22:49:07Z")
> [@Tranquilis](#): > > That said, keep your taxes simple - avoid large or exotic deductions - and file & pay on time. It really is that easy. It’s not really easy to keep your taxes simple if your financial situation is not simple. If you own your own business, have a lot of investments, or buy or sell property, your taxes won’t be simple. If you have a legitimate large deduction, it would be foolish to forego it simply because you’re worried that you might be audited. ---
**Author:** ![Alley\_Dweller](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/alley_dweller/32/430_2.png) [@Alley\_Dweller](https://boards.straightdope.com/u/Alley_Dweller)\ **Post date:** [April 19, 2017, 11:00pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/32 "2017-04-19T23:00:42Z")
> [@Fubaya](#): > > Does the IRS have access to your checking account? No. But they can order you to produce your checking account records at the audit or [they can serve a summons upon your bank](https://www.irs.gov/irm/part25/irm_25-005-006.html#d0e1386) compelling them to produce your records. ---
**Author:** ![Machine\_Elf](https://avatars.discourse-cdn.com/v4/letter/m/82dd89/32.png) [@Machine\_Elf](https://boards.straightdope.com/u/Machine_Elf)\ **Post date:** [April 20, 2017, 1:37am UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/33 "2017-04-20T01:37:58Z")
> [@DrDeth](#): > > Because you can and often do use listed property for personal use, while claiming 100% for business. Quite right; I do often use listed property for personal use, so I make it a point to claim 80% business use for those things. ---
**Author:** ![BubbaDog](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/bubbadog/32/333_2.png) [@BubbaDog](https://boards.straightdope.com/u/BubbaDog)\ **Post date:** [April 20, 2017, 2:25pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/34 "2017-04-20T14:25:02Z")
I was told by an accountant to never put a common description of your occupation. Things like teacher, chemist, real estate agent, engineer were no-no’s. Don’t lie, just use descriptions like elementary instructor, process manager, Transmission Planning Engineer, etc. The reason being is that the IRS will use common occupations as a selection criteria for random audits. So their audit selection might be to randomly pick .0001% of all Engineers, or .0015% of all CIOs. But their selection criteria for everybody else would be much less, like .000001% of all filers. ---
**Author:** ![PastTense](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pasttense/32/14550_2.png) [@PastTense](https://boards.straightdope.com/u/PastTense)\ **Post date:** [April 20, 2017, 2:54pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/35 "2017-04-20T14:54:47Z")
> [@Tranquilis](#): > > There is never a 100% guarantee - Random audits happen. > > That said, keep your taxes simple - avoid large or exotic deductions - and file & pay on time. It really is that easy. “Avoid large or exotic deductions”. But if these are fully justified then you are paying more tax than you need to. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [April 20, 2017, 3:42pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/36 "2017-04-20T15:42:02Z")
> [@PastTense](#): > > “Avoid large or exotic deductions”. But if these are fully justified then you are paying more tax than you need to. Well, it’s a trade-off. Unusual financial activity invites the risk of an audit. But if your financial activity is unusual, then you should pay the appropriate taxes on it and no more, and be aware an audit is much more likely. The question is - what’s better? The taxes you save or avoiding an audit? The obvious corollary is - if you know you’re doing something auditty, be sure that the paperwork is complete and correct and keep the necessary paper trail. Nothing says “dig deeper” than critical pieces of the necessary audit trail missing. I guess I’d ask people who’ve had a real audit on a home business or such; was it an ordeal even though you had all your ducks in a row? ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 20, 2017, 4:36pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/37 "2017-04-20T16:36:37Z")
> [@Fubaya](#): > > Does the IRS have access to your checking account? During a audit, yes. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 20, 2017, 4:40pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/38 "2017-04-20T16:40:12Z")
> [@Machine\_Elf](#): > > Quite right; I do often use listed property for personal use, so I make it a point to claim 80% business use for those things. But let us say, for example- it’s really 50%. Great audit op. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [April 20, 2017, 4:41pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/39 "2017-04-20T16:41:51Z")
> [@BubbaDog](#): > > I was told by an accountant to never put a common description of your occupation. > Things like teacher, chemist, real estate agent, engineer were no-no’s. > > Don’t lie, just use descriptions like elementary instructor, process manager, Transmission Planning Engineer, etc. > > The reason being is that the IRS will use common occupations as a selection criteria for random audits. So their audit selection might be to randomly pick .0001% of all Engineers, or .0015% of all CIOs. But their selection criteria for everybody else would be much less, like .000001% of all filers. No, it doesnt work like that. The IRS selects by the "DIF system, which measures how much your return DIFfers from another Taxpayer in your bracket, with various things shown to be hot audit items heavily weighed. ---
**Author:** ![glowacks](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/glowacks/32/5548_2.png) [@glowacks](https://boards.straightdope.com/u/glowacks)\ **Post date:** [April 20, 2017, 5:11pm UTC](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788/40 "2017-04-20T17:11:23Z")
I’m not going to answer the question directly but give you what I feel is the best advice in the area around audits. First, there is a weighted formula that the IRS uses that assigns a audit probability to each return. No one outside the IRS knows the exact weights used, but thinking through the process logically, they are most concerned about people taking large deductions that cannot be confirmed directly through information returns you or other people make. If you make mostly deductions for wages, for example, you’ll be less likely to be manually audited as long as you have submitted your packet of W-2s and 1099s so that they can verify that there are people who know to report income for all of the deduction you are claiming. For everything else, all you need is good documentation. One of the largest things that people will weaselly try to deduct is business entertainment expenses. Some of them may be legitimate, while some of them might just be the guy taking his own family. In this situation if you want to take a entertainment deduction, you need to document what business discussion was made with what person at the time proximate to the entertainment. Similar are deductions for travel; the IRS will need very good proof that your trip to Las Vegas was primarily for business and not mainly for pleasure with a concocted business explanation added on. (For example, someone who owned a store in Fargo, ND claimed to take a “business trip” to Las Vegas so he could get a better exchange rate on all the Canadian currency he acquired while running the store - this was obviously quite a while ago. The IRS didn’t exactly go along with that.) If you are making a large non-monetary donation to charity, you generally need to get it appraised and attach the appraisal to your return. If you are taking deductions for mileage, whether business, medical, or charity, you need to keep records of where you drove and how often. You should take all the deductions that you are legitimately allowed according to law. That you might not be able to meet substantiation requirements for them does not mean that you are lying if you take them; they simply will not be allowed if you’re audited. Unless they are a significant percentage of your income, you will not be penalized all that heavily (perhaps only interest). If you make a deduction that is somewhat sketchy as to whether its allowable and there isn’t clear IRS direction that such deductions are not allowed, then as long as you can make a reasonable case as to why it could reasonably be allowed, you will not be penalized even if they disallow it, so you’re no worse off than if you hadn’t tried (other than interest, I guess, but you’re investing the money you saved, right?). If you’re concerned about being audited because you’re lying, my only advice is to simply not lie. I am not going to give any advice to someone about how they can cheat the system, only how best to be prepared for the case in which it happens, which is to have absolutely everything documented as much as possible. While certainly you can worry about being audited because you’re not documenting everything, the best way to get around that worry is to simply document it correctly. Thus, I don’t believe that anyone should ever truly worry about being audited - if the potential losses from legitimate deductions being disallowed because of lack of corroboration are significant, then it stands to reason that you should take steps to corroborate them instead of worrying. [Previous page](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788.md?page=1) [Next page](https://boards.straightdope.com/t/avoiding-irs-income-tax-audits/784788.md?page=3)