How can I prepare for an IRS audit? Navigating an IRS Audit can be an extremely nerve-wracking experience. The questions, concerns, and overwhelming “what-if” thoughts can easily take over.
However, understanding the actual audit process and knowing how to prepare can help alleviate much of the stress associated with it, which is why it is important to know how to prepare for an IRS audit.
Rest assured, this article will identify why someone may be audited, what exactly is involved in an IRS audit, and the possible steps to take to be fully prepared.
Why am I Being Audited?
The IRS may initiate an audit for various reasons. Here are some common triggers for audits:
- Finding discrepancies in tax returns
- High income levels
- Claiming unusual or excessive deductions
- Being self-employed
- Finding inconsistencies compared to third-party reports
- Having a history of previous audits
- Being randomly selected
Receiving an audit notice doesn’t always indicate wrongdoing. Still, it’s essential to respond promptly and cooperate fully with the IRS to address any concerns to resolve the audit as efficiently as possible.
What Does the Audit Process Look Like?
- What is an IRS audit, anyway? In a nutshell, it’s an examination of an individual’s or business’s financial information and records to ensure that they pay the correct amount of tax.
- Are there different types of audits? Typically, there are three types of IRS audits: correspondence, office, and field audits. Correspondence audits are usually conducted through the mail, while office and field audits involve in-person meetings with IRS agents.
- What happens during an IRS audit? During an audit, the IRS will request documents and records related to your tax return, such as income statements, expense receipts, bank statements, etc. They may also ask for additional documentation to support the deductions, credits, or other tax-related items you claimed on your return.
How Can I Prepare for an IRS Audit?
Preparing for an IRS audit is key to ensuring a smooth and successful process. Here are some steps you can take to make sure understand how to prepare for an IRS audit and be prepared:
1. Organize Your Financial Records
Gather all relevant financial records. This will include income statements, expense receipts, bank statements, and any other documentation that could be related to your tax return. Organize your documents in a clear and simple manner so that it is easy to provide them to the IRS when requested.
2. Review Your Tax Return
Go through your tax return with a fine-tooth comb to ensure all information is accurate and complete. Double-check for errors or discrepancies that may raise red flags during the audit process. If you identify mistakes, consider filing an amended return to correct them before the audit begins.
3. Understand Your Rights
The IRS audit process can be overwhelming, and knowing that you have certain rights during the audit is important. To learn more about your rights, including your right to representation, see my blog post, The Taxpayer Bill of Rights. Consulting with a Tax Resolution Professional like those at Noble Pacific Tax Group can help you manage the process and communicate with the IRS. Having knowledgeable representation can prove invaluable when it comes to protecting your interests throughout the entire process.
4. Respond Promptly to IRS Requests
If the IRS requests additional information or documentation during the audit, respond promptly and provide the requested materials quickly and in a timely manner. Failure to comply with IRS requests can result in delays or further scrutiny, so it’s essential to be proactive and cooperative throughout the audit process.
5. Stay Calm and Cooperative
It is no secret that undergoing an IRS audit can be stressful, but it’s important to remain calm, cooperative, and professional at all times. Avoid making confrontational or defensive statements and instead focus on providing accurate and relevant information to the IRS. Having a positive attitude and demeanor throughout the process can help facilitate a more amicable audit experience.
Facing an IRS audit may seem daunting and come as quite a shock, but with the right preparation and support, you can confidently navigate the process. Remember to stay proactive, cooperative, and informed throughout the audit process. If you are facing an IRS audit, contact Sancus Tax for assistance. Their team of Tax Resolution Professionals can alleviate any stress and uncertainty that may come up during the process and give you peace of mind.
If you are facing an IRS audit, and would like help, contact the tax resolution professionals at Sancus Tax for assistance at (323) 792-0792. Our experienced team of professionals can alleviate any stress and uncertainty that may come up during the process, give you peace of mind, and ensure you achieve the best results.
