A recent report by the Institute of Taxation and Economic Policy is calling a number of Fortune 500 companies to task. The report alleges that a number of these companies paid nothing in taxes in recent years.
Being audited may well top the list of taxpayers' worst nightmares. This process can easily consume a person's time, energy and money as it can be extremely frustrating to deal with the IRS for months on end. Fortunately, there are a few steps that one can take to potentially avoid an audit. For individuals who own a business, it is important that they keep all business and personal expenses separate. If an action was taken for both personal and business purposes, such as taking a trip or having lunch with a friend who is also a client, it is probably best to keep these expenses listed as personal ones. It is also important that one does not list a hobby as a business. Keeping well-organized records is also vital toward avoiding an audit. Before making any deduction, one should ensure that he or she has the receipt or other evidence to support it. Keep all of these documents together with each year's tax return.