By Kristy Phillips
A Tax audit comes with taxes. April 15 is here and as you file your taxes, you may be thinking about tax audit defense. If you haven’t, you should be. I was shocked to read in Bloomberg that Uncle Sam is auditing more Americans than ever before. In the year 2000, 1 in every 203 Americans were audited. By last year the number had more than doubled to 1 in every 92 who face an audit. That is a pretty high percentage.
Of course you want to do every thing you can to save taxes. Statistics show that Americans devote 2 hours and 13 minutes of every eight-hour workday, or over a quarter of their working hours (27.7%), to paying Uncle Sam. Even more disturbing is that if we add the federal deficit to the picture—if the government collected enough in taxes during 2012 to balance the budget—it would take half of our earnings to pay Uncle Sam.
Tax Audits and Loopholes
What this means is that there is an ever increasing incentive to find loopholes to save on your taxes and that is okay. The important thing to remember if you want to avoid a tax audit is to check for math errors or computation errors before you submit your form. Take your time to make certain the form is filled out with the correct information.
I have also heard that you are less likely to face a tax audit if you fill out your own forms. I don’t know it that is true or not. Of course, there is no sure way to prevent an audit, but being careful could go a long way.
If you want to explore other good tax saving strategies and thus avoid a tax audit, you need to consider the benefits of owning a small business. You can learn about the popular LLC (Limited Liability Company) structure here. They are fairly easy to setup and maintain.