The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage. By Jeff Schnepper NEW YORK ( TheStreet) -- Unfortunately, there's really no way to completely avoid an audit. Most tax returns are selected either on the basis of a special target group (for example, waiters were targeted for unreported tips) or on the basis of a computer program that compares your income and deductions to those in similar circumstances (if you have a ghetto zip code on your return, a $10,000 charitable contribution would get you noticed). But, some returns are randomly selected.
The key is to minimize your exposure. Here are some examples of what to avoid if possible.
Today, it's the self-employed and small businesses. If you are self-employed or have your own business, you have more opportunity to either "hide" your income or "create" deductions by converting personal expenses into business expenses. To close the estimated $385 billion in uncollected tax receipts, the IRS has pinpointed small businesses and the self-employed as major audit targets.
4. Plan your taxes to preempt an audit. If, say, you have a huge medical deduction for a year that you feel would increase your chances of being audited, attach copies of your medical bills to your return. Alternatively, if you made an unusually large charitable contribution, attach a copy of the check or receipts to your return. The IRS computer will still kick out your return, but when a real person looks at it, the reviewer will recognize that you know the rules. It may actually reduce your odds of a full audit. The good news is, if you are audited one year with a refund or no change, it decreases your odds of being audited in subsequent years. In fact, if you are audited on the same items two years in a row with no additional taxes due, the IRS manual specifically recommends that they not audit you on the same items for the third year. Jeff A. Schnepper, Esq., is the author of multiple books on finance and taxation, including How to Pay Zero Taxes in 2012, and all 28 previous editions of How to Pay Zero Taxes. He is a financial, tax, and legal advisor for Estate Planning of Delaware Valley and operates a tax, accounting, and legal practice in Cherry Hill, New Jersey. Mr. Schnepper is Microsoft's MSN MONEY tax expert, an economics editor for USA Today, and tax counsel for Haran, Watson & Company.