Income Tax Audit Advice
Income tax audit advice. Income tax audits aren't fun, but they can be a little less painful with these tips.
With any luck, you’ll avoid an income tax audit altogether. However, whether due to an error in arithmetic, an unusual deduction, or some other unknown variable, you may find yourself receiving a dreaded letter in the mail from the Internal Revenue Service.
If you fabricated something on your income tax return, you may want to quit reading now and look up cheap flights out of the country. But as long as you filled the form out in good faith, you should be fine.
Here are some tips on making an audit as painless as possible.
The IRS can audit a return up to three years after it was filed, so keep all of your files for at least four years. In fact, this is the number one way to eliminate audit anxiety: keep good records. Develop an organizational system (if you don’t have one already) and keep to it. File away old records in a waterproof and fireproof place, such as a household safe.
If you have many deductions or an otherwise complicated tax return, you might want to consult an attorney. For the vast majority of cases, however, there’s no need to do this. Many books and online resources exist to explain the auditing and recordkeeping process to the layman. An afternoon in the library can provide you with all the knowledge you need before the audit.
The IRS will generally set up an appointment at a local office, or sometimes, at your home. The audit notice will tell you the reason why you’ve been selected. Bring all the records pertaining to the IRS’s questions to the meeting, but leave everything else at home. If you have an attorney, he or she can accompany you to the meeting. If there’s something that’s unclear on the audit notice form, make sure you get the IRS agent to explain it to you before you explain your side of the story.
More than a fifth of all audits end up with a refund to the taxpayer or, at the very least, no additional payment. Very few people are charged with violation of the tax code, so if you have been keeping good records and are truthful on your tax form, getting through an audit should be no sweat at all.