Got Audited in 2023? 3 Ways to Avoid Making This Mistake Again in 2024

So you've prepared your taxes and are gearing up to hit submit. Once you file them, all you really need to do is sit back, relax, and wait for that money to show up in your bank account, right?

Well, if you were on the receiving end of a tax audit in 2023, then you might spend the next few weeks worrying about a repeat situation. So before you submit your tax return, you may want to give it another look and make sure you're following these three rules.

1. Know which deductions you can and cannot claim

A big reason some tax filers end up getting audited is because they claim deductions they aren't eligible for. You may, for example, be convinced that you can claim a home office deduction because you do your job from home. But did you know that unless you're self-employed or own a business, you can't do that? The home office deduction is not available to salaried workers.

Similarly, some self-employed people make the mistake of thinking they can deduct the cost of child care, or even pet care. But that won't fly.

You may be able to claim the Child and Dependent Care Credit, which lets you claim a portion of your child care expenses. But that's not the same thing as taking the total amount of money you spent on child care and deducting that sum.

Because it can be confusing to determine what expenses you can and cannot claim on your taxes, it's a good idea to work with a professional to file your return. But if it's too late to pivot and do that this year, at least spend some time reading up on tax deductions so you don't make a huge mistake.

2. Report your deductions to the dollar

You might recall that you spent about $200 to purchase a Chromebook last year that you use for business. But if that device actually cost you $193, that's the number you should be putting on your tax return.

When you claim round numbers for your deductions, it tends to raise a red flag at the IRS -- especially if all of your expenses are nice, round numbers like that. So take the time to find your receipts and put the actual numbers on your tax return for accuracy.

3. Make sure to report any income you earned in 2023

You might assume that the only income you have to report to the IRS is income you were paid for doing work. But that's not true.

Any income you earn is income you're required to list on your taxes. So if you earned a tiny amount of interest in a savings account, tell the IRS. Failing to do so could lead to an audit. And it's silly to land in that position over what could be a pretty small amount of money.

If you're not sure what income you need to report, log into every financial account you have (savings, brokerage, etc.) and see if you have any tax forms available. If you see a 1099 form, any income listed on it is income that needs to go on your tax return.

Statistically speaking, the chances of getting audited are pretty low. In 2019, the audit rate across all tax returns was just 0.25%, reports the U.S. Government Accountability Office. That's the last year for which the GAO has put out that data.

If you were audited by the IRS last year, it doesn't mean you're automatically in for a repeat this year. But you can lower your chances by knowing which tax deductions to claim, listing the right amounts, and reporting every dollar you earned in 2023.