Transcripts

CPA Sandy Botkin is a former attorney for the IRS and author of the book Lower Your Taxes Big Time…

The way audits work, when your return gets sent to the service center it then is given a score. The higher the score the better the chance of the audit. We don't know much about the score per se - it's one of the best-kept secrets in government, but we know certain things about the score. We know for example if you have a big-ticket item like: dental, medical - all that's deductible, but if it's a huge item. Like let's say it's twenty five thousand dollars for dental, IRS will audit you. But if you attach a little schedule explaining, breaking down how you got that twenty-five thousand - for example, you might say it involved orthodontia for my three children. Then the IRS will look at that and an examiner will look at that and say, "Oh, this has been explained" and that won't trigger an audit.

Sandy says, there's nothing wrong with minimizing your taxes to the bare minimum as long as it's legitimate and you have the right documentation.

You probably see state patrolman with radar guns where you live. You're going within the speed limit, what's that state patrolman going to do? They'll let you go right by. Same thing is true with taxes - if you have the right documentation you will increase your deductions, reduce your chance of audit. And in the case that you do get audited they'll just say, "Well, if you've got the right records, goodbye."

You can link to Sandy's website from ours: somethingyoushouldknow.net - I'm Mike Carruthers and that's Something You Should Know.