Ranking just slightly lower than the root canal on the desirability scale, the IRS audit is something most people would prefer to avoid. But how can you avoid being audited by the IRS? The answer is simple...and not so simple.

The first rule of thumb is that if you don't have a receipt, you can't take a deduction. In the event that you are audited, the more organized you are and the more you can back up your deductions, the more likely the IRS will be on your side. Maintaining accurate records and keeping all receipts for deductions is essential to avoid an audit, or to avoid paying penalties and back taxes if you are audited.

Chances are if you file a straightforward return without much "creativity" in terms of the deductions you claim, you will avoid being audited. After all, the IRS is not after small time taxpayers...necessarily. However, claiming a deduction that is "too good to be true," or claiming a shady deduction several years in a row sends up a red flag to the IRS. The best example of this is the "home business." Many consumers may claim a home business loss year after year. Typically, the rule of thumb is that if you claim a loss from your business more than 2 years in a row, you are likely to face an audit. Claiming such a loss is okay if it is legitimate and can be substantiated with receipts and accurate records. However, your ability as a business owner and operator is called into serious question if you are constantly operating at a loss.

While there are a great many tax-preparation software programs out there, including Turbo Tax, and as many websites that serve the same function (i.e., completetax.com), nothing takes the place of a tax professional or accountant. These individuals are often worth their weight in gold, quite literally when it comes to your taxes. You are much more likely to find a deduction you might not have known about through consulting a professional. Also, if your taxes are a bit more complicated including capital gains, personal business income/loss, and other complications, you may need someone familiar with tax ins and outs to help you get it right. After all, mistakes can be far more costly in terms of penalties than missing a deduction.

As tax season approaches, keep these simple hints in mind.