So you’ve done your taxes and alas, the IRS has sent you a letter that you are being audited. The walls are caving in, you’re having panic attacks, and can’t possibly fathom what are you going to do. Take a deep breath, and read this article, rest assured that you don’t need to be nervous. Unless you intentionally planned on committing fraud, that’s a whole different story. IRS audits are just trying to figure out if incomes and figures add up right; it simply inquires of your tax return. The IRS its self says that an audit is,” to determine if income, expenses, and credits are being reported accurately.” Follow these steps and be prepared.
First, don’t ignore the letter, even though it might be easier and tempting to ignore bad news. Read it, read slow, and read it one more time. Read which year in question they are auditing, and what documents specifically they are asking for. Prepare all the necessary returns and explanations for the representatives.
There are different types of audits that the IRS does. One is an in person interview, where you physically have to be in the IRS office and speak with IRS people that question abnormally high deductions, that they need to see proof of. Once in this audit, don’t say more than what is asked. Do not offer up any other document that what was asked to bring. The less you say the better, because saying more leads to more questions.
It is important to know that you do have the right to have an attorney present if you feel that it is needed. It can be a mailed in audit also called corresponding audit, which is just asking you about a simple mistake that you can correct by mailing in all the correct documents. Case closed. The last audit is a field audit, where they may actually come to your home or to your job, scary I know, but remember to breathe. Remember if you feel that you need an attorney or tax professional you can request to have the audit done in their office.
To better prepare yourself for these audits, read up on the tax laws that are specific to the problem outlined. Knowing this information will better prepare you for questions asked by the auditor, and leave them more satisfied with your answers.
When being questioned be polite and courteous and answer each question truthfully. It is not wise to lie to the IRS, it is just silly. Make sure that all the documents presented be accurate, clear, and on time–meaning, have all the documents at the auditing. If you have all the correct audits the process will go much smoother. If you feel that you need more time, don’t hesitate to let the IRS know you need more time. You can go on their website and request more time.
Once all the auditing is wrapped up you will receive an examination report, which is wise to look over carefully for anything that might confuse you. Don’t hesitate to call the IRS and ask about anything you need to clarify. If you disagree with a finding let them know, so that you and the auditor can come to a compromise.
If you follow these tips then the audit process will be a breeze, or at least a little easier to handle.