The numbers are deceiving: IRS gum-shoes audited only 0.57 percent of individual tax returns in fiscal year 2002. The rate isn't much higher (only 1.45 percent) for Schedule C filers with incomes above $100,000.
But the free ride is over. The IRS began revving up its audit machine last year as it recovered from budget and personnel problems. So while taxpayers who played "audit roulette" in recent years were fairly safe, the battle has been joined in 2004.
Advice: To make sure your 2003 return flies under the IRS radar, know the key 'red flags' that catch auditors' attention. When such red flags are unavoidable, just make sure you keep your recordkeeping solid.
5 business-return 'red flags'
1. Failing to match up K-1s, 1099s. Last year, the IRS began matching Schedule K-1s—which report income from S corporations and partnerships—to owners' returns. So it's especially vital this year to reflect the correct K...(register to read more)
- How to Fire an Employee the Legal Way: 6 Termination Guidelines
- Small Business Tax Deduction Strategies
- Cash in tax chips on monetary gifts
- Are you an 'average' taxpayer? That's a good thing
- Feds launch contractor crackdown, offer amnesty deal
- It's official: State employees must pay union dues—indefinitely