Tip #1: Don't overestimate donations.
Typically, the IRS allows you to deduct what's called the fair market value of an item, which can be difficult to assess according to Eide Bailly CPA Joshua Hayes.
“Some people use what would a thrift shop value be as a guideline for what that value is,” Hayes said.
Also regarding donations, Congress is now allowing any donation made to the Haiti relief effort before March 1st to be deducted on your 2009 tax return.
Tip #2: Don't under-report your income.
This is especially if you claim your own wages at your job.
“Hair salons, cab drivers, waitresses, waiters,” Hayes continued, “Those tend to be up the list higher on the list of scrutiny for sure.”
Tip #3: Be careful with home-office deductions.
Excessive deductions can raise eyebrows, and because determining whether you qualify is a rather complicated process, Hayes says, talk to a professional.
“Once you get to that point, you should deduct every expense that you're allowed without fear of an IRS exam.”
Tip #4: Beware of income thresholds.
If you earn more than $100,000 per year, the odds of you being audited actually doubles.
“It may triple in some situations.”
Tip #5: Check for math errors.
Make sure that the columns add up. Also, make sure the total dollar value of capital gains and/or losses are properly calculated.
Tip #6: Be sure to sign your return.
Not doing so will almost always lead to scrutiny you ordinarily wouldn't have had.
Bottom line, Hayes says the key to avoiding an audit is being honest, and if you are audited, it doesn't necessarily mean you owe.
“So if your documentation is good, your paperwork is good, you filed your tax return accurately, you should have no problem with the IRS exam.”
The Internal Revenue Service has compiled the top 10 tips that will help your tax filing process run smoother than ever this year.