How To Prepare For IRS Tax Audit
Preparing for an IRS tax audit is not exciting. The only thing you may be excited about is getting the process over with. But even though you may be stressed and ready for it to end, you have to make sure you are prepared. If you are not prepared for one you may be putting yourself in position to make a mistake. And if this happens the IRS may have reason to charge you more money. Is that something you want to deal with?
Receiving an audit notice from the IRS is a nerve-wracking event. No matter how carefully you prepare your returns, it’s hard to imagine that a letter from the IRS is anything but bad news. Fortunately, audits are sometimes simple procedural affairs that can be easily answered by mail. Even a full-blown audit needn’t be the end of the world if you prepare carefully and do some research before responding.
Getting an IRS tax audit notification is kind of like getting hit in the stomach for most people. Many people feel they are being accused of wrongdoing immediately, and get stressed to the nines trying to understand this tax audit nightmare that they envision. The truth of the matter is, an IRS tax audit can be rather benign if you prepare for it correctly. Having what you need and knowing when to be quiet can work wonders for your IRS tax audit sanity
Do not be scared! It is easy to be stressed and scared if you are being audited by the IRS. But remember, there is no reason for this and if you find a good professional there is even less to worry about. An IRS audit does not mean that you are in the wrong. It just means that the IRS has decided to double check your work and cross reference it with your records.
If, after your audit is completed, you honestly think an unfair result has been rendered, you have a right to appeal that decision. The appeal procedure is detailed in IRS publication 1546. Don’t hesitate to use the right to appeal if you feel sure it is justified in your case. After all, the IRS is made up of ordinary people who can certainly make their own share of mistakes. Perhaps the decision on your audit is one of them.
In addition to inspecting your business, an auditor may inspect your personal finances. The IRS may compare your current lifestyle with the income presented on your tax return to determine if they are compatible. An auditor may also talk with others who are knowledgeable about you and your financial situation.