It’s no shock to followers of Financial Samurai that the IRS has targeted conservative groups since Obama took office. This isn’t new; the government often discriminates by imposing higher taxes on those earning more, while phasing out deductions and credits for others based on their income.
Interestingly, if a Republican were president, it’s likely liberal groups would face similar scrutiny. Discrimination can be blatant or subtle, but it often goes unnoticed until it’s too late.
Here, I’ll share some practical tips to help you dodge an IRS audit, a situation no one wants to be in.
Three Smart Ways to Avoid an IRS Audit
1. Align With Those in Power: Your political stance might influence your audit risk. If the current president is a Democrat, openly supporting the Republicans might not be wise. The U.S. is nearly split between the two major parties, and tensions run high. Showing allegiance to the reigning party could protect you from unnecessary scrutiny by not only the IRS but potentially the FBI too.
2. Donate Wisely: Contributions to charity can reduce your audit risk, especially if they align with the interests of influential figures. In 2012, Obama donated over $100,000 to the Fisher House Foundation. Matching such gestures by donating to similar causes could be beneficial. Also, consider donating to charities that are dear to key government figures like the Treasury Secretary or the head of the IRS.
3. Direct Political Donations: Donating directly to the president’s campaign can put you on a sort of unofficial “do not audit” list. High-ticket fundraising events are particularly effective. For example, attending a $33,400 per plate dinner and being a registered supporter virtually guarantees that you won’t be audited.
General Advice to Stay Off the IRS Radar
The higher your income, the more attention you’ll draw from the IRS. To stay under the radar, avoid making errors on your tax returns and consider simple lifestyle choices that don’t draw attention.
While these tips might seem a bit tongue-in-cheek, the underlying principle is to align your interests with those in power. Whether it’s donating to a cause favored by the president or avoiding glaring tax errors, these strategies can provide a buffer against audits.
Remember, the government’s reach is extensive, and they’ll continue to find ways to tax and audit. It’s not just about dodging audits but understanding and navigating the system effectively. By staying informed and cautious, you can protect yourself and your assets from undue attention.
