What is an audit and why do people cringe at the word? The Internal Revenue Service issues audits as a regulatory measure to ensure that the corporation is completing accurate tax returns. Sometimes they are issued simply to verify something that seems uncomfortable or you may be singled out for an audit simply because your number was chosen. Avoiding an audit or lessening the possibility of an audit is quite easy.

First, to avoid tax deductions, claim the tax deductions to which you are legally entitled. If there are items you are unsure about, consult a tax attorney or tax professional: Get legal advice on the specific deductions you can claim. If you don’t have documentation to verify your claim for a deduction, it’s probably not a great idea to go ahead and claim it. Sending documentation along with your return will help prevent red flags and avoid tax audits.

The Discrimination Index function is a computer program that assists the Internal Revenue Service. Basically, your tax return is compared to tax returns in the same income bracket. If any deduction or claim seems outrageous compared to others in your tax bracket, your tax return may be flagged for an audit. To help avoid a tax audit, be honest on your tax return and don’t exaggerate the numbers. When you run through the discrimination index function, you want your return to show normal comparisons.

There are many things you can do to avoid tax audits. For example, first and foremost, keep track of all your income. Keep copies of your W2 and 1099 forms, all receipts, and any financial information that is relevant to the information reported on the tax return. Keep all of this information organized, categorized, and separated into specific years. Also, if you received help preparing your return, keep a record of the contact information for the preparer who helped you with your tax return. All of these tips above may not completely help you avoid a tax audit, but they would certainly help if you were chosen for an audit.

If you claim deductions instead of taking the standard deduction, any itemized listing that is unusually high for your income range could flag your return for an audit. To avoid a tax audit, stay honest and accurate with all your charitable contributions, especially. For example, do not indicate that you have contributed $15,000 to a special organization if your annual income is only $35,000. This is not an action someone would take if they were trying to avoid a tax audit.

If you are a small business owner or partner, it would be in your best interest to try to avoid a tax audit. Filing a Schedule C, which is required for small businesses, is tricky and complicated. If you are not familiar with taxes, you should consult a tax attorney or tax professional. Avoiding a tax audit if you are a small business is almost impossible. The Internal Revenue Service is pretty sure that mostly self-employed people try to hide or underreport part of their income; this makes small business owners a target for tax audits.

In the same vein of self-employment, many people who receive some or all of their money in cash winnings are also subject to tax audits. To help avoid tax audits, be sure to keep all income records in a ledger or computer program. Remember to report all income to the Internal Revenue Service and if your income is not currently taxed, be sure to pay estimated taxes. These are also easy ways to avoid a tax audit.

If you’re divorced, both parties to divorces wave a red flag for a tax audit the first few years. Make sure you and your ex-spouse know who is claiming the dependents in the relationship. A child can only be claimed by one parent or the other. Many divorced couples resolve a situation where claim years alternate. Also, if you are not in constant contact with your ex-spouse, make sure that around tax season each individual knows who is claiming dependents.

If you have money or investments in offshore or foreign accounts, it is your responsibility to report the money produced and pay any applicable taxes required on the funds. Having foreign accounts is legal, but taxes must be paid on them. Failure to report this foreign income for any reason can result in a criminal penalty.

The bottom line in avoiding a tax audit is simply to be honest, accurate, and file your return in a timely manner. Stay organized and seek professional assistance when needed, especially if you have a particularly difficult filing situation.