What to Know About an IRS Audit

by Coozle on October 2, 2013

Before dealing with an audit by the IRS, it is important to be prepared. There are many different reasons why an audit can take place depending on whether it is on a personal level, or a business level. Learn the steps to make sure the whole process runs smoothly, saving you time and energy. Get organized today to prepare in case of an audit.

The types

There are four main types of IRS audits ranging in severity. They are:

  • Correspondence audit – out of all the IRS audits you can have, this one is the mildest. In this situation, the IRS will send you a request to give them more information on your tax return. This could be anything from why you filed jointly, to how you figured the amount of charity you gave. You may have to go back and prove with receipts the contributions you have made.
  • Office audit – this audit is much more serious, and requires you to go in to an office to speak with an IRS agent. In these situations, it may be best if you take a tax attorney with you, even if you filed your taxes on your own. Most of the time, these are over within a day, but could require you to send in more information after this point.
  • Field audit – when the IRS shows up at your doorstep, you know you’ve done something wrong. This is by far the most serious audit. Instead of just looking at a few specific records, they will ask to look at everything you have documented. In most cases they have something specific they are looking for, but want to be thorough in the process.
  • Random audit – these audits are completely random where the IRS agent isn’t looking for anything in particular, just searching through which items on your list have the highest taxes.

Preparing for an audit

Even if you have nothing to hide, getting ready to do an audit can be frightening. One small mistake can cause a huge financial problem. Rather than worrying, prepare beforehand. It is best to keep all your documents organized even if you aren’t going to be audited.

Put together your tax information with receipts and other documents. In most cases, the audit notification won’t be until a year or two after you have filed. Make sure to keep the documents at least that long. Put together a file and store everything in the same place as soon as you file.

Some people’s taxes are extremely simple; others take more twists and turns. If you have any worries on how you are filing your taxes, invest in a tax professional. They will be able to sort things out for you, making it easier to file the right way.

Be honest with your taxes, but be prepared for an audit. If you do them right the first time, and keep the documentation organized, you won’t have anything to hide, and the whole process will be much easier. If at any point of the process you run into problems, consider using a tax attorney to ease your troubles.

By +Cassie Costner

Cassie writes for www.taxlawsolutions.com on the ways to prepare for an audit. Previously she has written on why it is important to be honest on your taxes, and getting the best return.

Cassie writes on tax information, and how to handle your taxes in the most difficult situations.

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