Every year, the IRS audit at least over fifty thousand business establishments and over 1.3 million of taxpayers which is mostly done using correspondence exams. Even if it cannot be guaranteed that you will never be audited by the tax agency, you can still lower the possibility of being audited by following a few tips which can help you avoid IRS audit in the future. 1. To reduce the possibility of IRS audit, you always have to double check your computation on all of your tax returns in order for you to ensure that every calculation is correct. The income and tax deductions in tax returns are double checked by the IRS system to ensure that all details are accurate. If the system finds out that you have a miscalculation, your tax return has the possibility to be flagged for tax audit. You also need to make sure that you have documents to support your claims of every deduction made on your tax return. This is because tax deductions are evaluated based on the taxpayers' income bracket to recognize which taxpayers claim high deductions in their statements.

2. Always be honest and avoid understating your real income. Most of the time, taxpayers with occupations that generate their incomes in the form of cash payment like waiters and store owners and even self employed professionals like lawyers, dentists, doctors, etc. are more likely to be examined by the agency and be a perfect candidate for an IRS audit. This is particularly correct, especially if you have back taxes and other tax debits to settle with the agency. 3. It is also important to keep all pertinent documents with regards to your business if you are a business owner. This is because even if you are losing money on your business and you are stating it in your tax statement, the IRS may think differently. This is because very few people will stay in their business if they think that it does not generate any income at all unless your business is also your hobby. If you keep your documents, you will be able to prove that the agency is actually losing money on your business and this can be your effective defense once you find yourself involved in an IRS audit.

Always remember that whenever you are chosen for an IRS audit, you are required by the agency to provide them all the pertinent documents that are involved in your deductions including travel expenses, meal receipts, and other related documents. This is your way of proving that all deductions are relatively necessary for your business. If you were able to organize your files properly, then there's no reason for the IRS agent to think that you owe the government additional taxes from your deductions. Always make it a point to keep all the receipts of your business expenses and other supporting documents related to your deductions at least for a couple of years after you have filed your tax return. This is because the IRS can audit you anytime it chooses during these years.