Next to reading your own obituary in the newspaper, the most frightening reading material that you might encounter could be a letter from the IRS advising you that you are being audited. While it's literally true that anyone may be audited at any time, your chances of being audited increase as your income increases. In fact, any gross income over $50,000 most likely will be scrutinized carefully, although an audit may not necessarily result. An audit can be time consuming and expensive, especially if you lose. However, you shouldn't assume that the audit letter sent to you is correct. You can challenge it. Most audits are restricted to the items the IRS questions. However, if your tax return is selected for the Taxpayer Compliance Measurement Program, the IRS will require you to prove every item on your return.

An attorney or tax preparer may represent you at the audit and you don't have to attend unless the IRS has issued an administrative summons to you. There is nothing that says you can't represent yourself at an audit, but you should be fully prepared because the IRS examiner certainly will be. Also, learn all you can about IRS rules and regulations covering the issue of your audit. Make certain that you understand them; the interpretation of these rules will determine the outcome of your case. If you do represent yourself and have not received a summons, you may request the audit be delayed until you confer with your tax advisor. With the in-person audit, you will learn the results right away. Decisions are made, most times, on the spot. If you win, that's it. If you lose, you have the choice of paying up or entering into the appeals process.

The following advice is offered to people who may want to represent themselves:

• First and foremost, you need to keep accurate and complete records. Good records are the foundation of a good tax return; they are also the foundation for winning an audit.
• Second, keep the conversation to the point.
• Third, be honest.
• Fourth, don't get personal.
• And last of all, learn and understand the IRS rules and regulations covering the matter at hand in your audit.

Whether or not you are audited can depend, in part, on how your itemized deductions compare with the average amounts claimed by other taxpayers in your income category. Tax returns with numbers well outside the norm in such areas as interest deductions, medical expenses, taxes or charitable contributions are screened by a computer, then subjected to human scrutiny. Above-average deductions may lead the IRS not only to challenge other items on your return, but also to review your previous returns. However, if your numbers are correct you should report exactly what they are, even if they prove to be higher than expected for your income bracket.

If you've kept good records and can substantiate what you've claimed, you have little to worry about in an audit, should it occur. Taxpayers often avoid audits when they attach proper supporting documents and file them with the return. These materials allow the IRS to see exactly what method was used, how figures were developed and what tax laws were followed, thus avoiding unanswered questions that could lead to an audit. The following deduction chart will show you how your numbers compare with the averages:

AVERAGE ITEMIZED DEDUCTION CHART

These figures are based on returns filed in 1994 for the 1993 tax year.