How to Avoid an IRS Audit

However, Reed adds that many Americans actually cheat themselves out of deductions because they fail to keep accurate records.

"Two common examples are receipts for contributions to charity and mileage logs. When taxpayers try to recreate these expenses, they discover it is hard to remember events that happened more than a year ago," Reed says. "In the absence of good records, the deductions are disallowed when audited."

[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

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