Rachita Wadhwa Explains How to Avoid a Tax Audit with Investor’s Business Daily￼
While Tax Day may be behind us, the risk of getting a scary and potentially costly tax audit is not. To help families learn how to best avoid a dreaded visit from the IRS, Investor’s Business Daily turned to Rachita Wadhwa, lead tax preparer and planner at Potentia Tax, for insight on ways to help avoid an audit for the 2021 tax season and beyond.
One tip that Wadhwa often recommends to clients is to be specific about expenses by categorizing them whenever possible instead of listing them all under general expenses. “The IRS might think you’re trying to bury (questionable) expenses if you lump them together rather than properly itemizing them,” she explains. “Minimize the use of an ‘Other Expenses’ category and itemize specific expenses like ‘Marketing’ or ‘Travel.’”
Another strategy to help avoid a tax audit is to avoid numbers that appear doctored. To achieve this, simply try not to use rounded figures that end with a zero or a five. Wadhwa tells Investor’s Business Daily that rounded numbers can cast doubts on its validity and make the IRS curious, potentially leading to an audit.