8. Record the correct cost basis when selling stocks.

10 Ways to Avoid an Audit

An unrealistic stock value on your return most likely won't go unnoticed by the IRS. If you sell a stock, be sure to include the correct original purchase price, no matter how far back the transaction was made. Also know the date a stock was purchased, since this is what determines the cost basis and tells the IRS how much profit you made when you sold it. Even if the stock was a gift, don’t guess when it comes to the details. Incorrect info and "guesstimates" are common causes of further questioning. (iStock Photo)

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How to Avoid an ... Last year, more than 1.4 million Americans were audited, the most in a decade, according to a recent article by CNNMoney.com. This year, it's only expected to get worse. With the Obama administration pouring billions of dollars into tax collection, a greater number of people are expected to be questioned by Uncle Sam.

The government plans to spend $8.2 billion in tax enforcement initiatives by 2011, a nearly 10 percent boost compared to last year, says CNNMoney.com. How can you avoid the scrutiny and potential costs of a tax audit? Read on for 10 easy ways to stay off the Internal Revenue Service's radar. (iStock Photo)
1. Don't make ma... Bad math is one of the most common red flags that can lead to an audit, according to the IRS. If you make a math error and you're lucky, the IRS will simply correct your mistakes and send you a bill. However, there's just as good a chance that the IRS will flag your return and subject it to careful review… especially if your error is severe or you've made multiple mistakes.

To avoid errors, double check your calculations and don't rely too heavily on your tax software. Software can't correct your figures if you've entered the data incorrectly. That's on you or your tax preparer. (iStock Photo)
2. Type your ret... If you don't e-file, then choose to at least type your return. Handwriting slows down the process and auditors are more likely to catch big mistakes. Illegible handwriting can also cause an auditor to "reject" your return. The IRS claims the rate of error on e-filed returns is about 1 percent, whereas the rate of error on paper returns is close to 20 percent. (iStock Photo)
3. If you're a h... High earners obviously have more income and deductions to report. After everything is accounted for, from stock transactions to second homes and charitable donations, there's a much greater chance for error.

Hire a professional tax preparer to eliminate the hassle and, more importantly, to increase the accuracy of your return. Taxpayers with an income over $200,000 are 50 percent more likely to get audited than those that fall in a lower income bracket. (iStock Photo)
4. If you're sel... With soaring unemployment, many people are claiming home-based businesses when they file their returns, which is making the IRS skeptical, says CNNMoney.com. So before you try to write off your new boat as a home-based fishing company or any other hobby as your dream job, know that the IRS is keeping close tabs on this sort of behavior.

On the other hand, if you really are self-employed, be sure to keep consistent records of all income and expenses, and consider opening up a separate account for your business. If your business has largely profited, be mindful about reporting realistic travel and entertainment expenses, as this is another common area that signals a red flag. (iStock Photo)
5. Don’t forget ... File the correct marital status, with the correct number of signatures, or the IRS will question the accuracy and completeness of your return. Remember that the marital status is determined as of December 31, 2009. You cannot file as single if you're married -- even if you're living apart from your spouse -- and you cannot file as married filing jointly without the consent of your spouse.(iStock Photo)
6. Claim the cor... Only claim a person as a dependent if he or she meets the legal definition of the term. Avoid adding or removing dependents from year to year without an explanation, or the IRS may be inclined to investigate. In addition, be sure you report the correct Social Security numbers, another common error that's reason for concern.(iStock Photo)
7. Come clean ab... Taxpayers with foreign accounts should take added precaution as the government cracks down on offshore bank accounts. Taxpayers must indicate on their returns if they have one and include any interest income from the accounts. Anyone filing a U.S. tax return is required to report foreign bank deposits that exceed $10,000 at any point during the year on form 90-22.1.(iStock Photo)
8. Record the co... An unrealistic stock value on your return most likely won't go unnoticed by the IRS. If you sell a stock, be sure to include the correct original purchase price, no matter how far back the transaction was made. Also know the date a stock was purchased, since this is what determines the cost basis and tells the IRS how much profit you made when you sold it. Even if the stock was a gift, don’t guess when it comes to the details. Incorrect info and "guesstimates" are common causes of further questioning. (iStock Photo)
9. Don't lose mo... If you file a Schedule C, you automatically increase the likelihood of an audit. According to the IRS, nearly 70 percent of taxpayers that report net losses on a Schedule C have artificially inflated expenses to craft the shortfall.

File a Schedule C for three years in a row, and your chances for an audit are even greater. So don't report losses unless they're true and you have the evidence to back them up. (iStock Photo)
10. Don't brag a... Think you pulled a fast one on the IRS and you're proud of it? Keep it to yourself. That's because people that tattle on those that filed false claims or somehow managed to trick the IRS can get up to a 30-percent reward for the additional tax collected. Obviously, this can be avoided by not cheating on your taxes, as well as keeping quiet if you think you might have stretched the truth.(iStock Photo)
What do you thin... Do you have tips to share to help taxpayers avoid an audit? What do you think are the most common red flags on returns? Share your thoughts here.

(iStock Photo)