How to Avoid an IRS Audit

And what to do if the government takes a second look at your taxes.

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[See How to Get the Saver's Credit.]

If you're found during an audit to have made mistakes on your taxes, how do you square things with the IRS?

According to Rozbruch, the best track to take when an audit begins is to attempt to make things right immediately.

"If mistakes are found during the audit, you can come 'clean' at that time," he says. "If you are aren't going through an audit and want to correct a mistake, you can do so by filing an amended return by filing a 1040X within three years of the originally filed return."

Reed adds that if the taxpayer is not maliciously trying to cheat the government, the IRS can be lenient.

"In many cases, the IRS will abate penalties when a strong case can be made that the taxpayer made an innocent mistake," she says, adding that making things right "usually just involves paying the amount owed."

Twitter: @davidcfrancis