Second Tip to Help Avoid an Audit:

The IRS continues to have several watch areas for compliance through 2013.  Small businesses are going to be a major focus this year.  This includes corporations, partnerships and sole proprietors.   While you never know when you may be selected for an IRS Tax Audit, these tips will help you understand what the IRS will be focusing on through the 2013 tax season.

Stay tuned for more tips:

Audit watch area number two “High Income/High Wealth Taxpayers”:

The definition of high income/high wealth taxpayers are those who bring in a total positive income of more than $200,000 in a year.  Total positive income includes all gross receipts and sources of income before expenses and deductions (think adjusted gross income).

In 2013, the IRS will focus on taxpayers with total positive income of more than $1 million who file a schedule C business return.  Last year, the IRS audited 12.5% of all individuals with incomes of more than $1 million – a significant increase from 2010, when the IRS audited 8.4% of these taxpayers.