Help! I Got a Letter from the IRS
If you received a letter from the IRS this year, or are worrying about receiving it’s best to remain calm and refrain from jumping to conclusions. The good news is, the chance of you being audited by the IRS is not very high, especially since audit rates have been decreasing. Read your IRS letter thoroughly and carefully to ensure you understand why exactly you are being audited. Being audited is never the end of the world, and in some cases can be resolved in your favor. The best way to handle an audit is to learn ahead of time what to do if you get audited by IRS.
Audits are usually issued by the Internal Revenue Service (IRS), and two main reasons may warrant why an individual or a company may be audited by the IRS.
1.Random audits are not as frequent as they used to be; however, they do still exist.
2.The majority of audits ordered by the Internal Revenue Service (IRS) are because they discovered an error or they sense a taxpayer is attempting to wrongfully receive a larger tax refund than deserved.
What Do I Do?
Whenever the IRS makes the decision to carry out an audit, a representative from the Internal Revenue Service (IRS) will usually contact you through mail. Beware of scammers that will call and attempt to convince you that you owe money to the IRS and will even ask you to pay through third parties. Don’t do it, as this right here is a major red flag. In more legitimate cases, when contacted, you will be provided with the necessary information that you may need for the audit as well as the time the audit will take place. Although the majority of audit appointment extension requests are granted, this may be the best time for you to hire a tax expert because you may not be ready for an audit.
How Do I Minimize the Risk of Being Audited?
If you are brave, and decide to take filing matters into your own hands, there are some ways you can help to minimize the risk of being audited. The greatest way you can reduce risk, is to limit the amount of suspicious activity.
- Only write off necessary and legitimate business expenses
- Make sure you have documentation to prove you have donated what you claimed
- Double and triple check numbers claimed
- Be knowledgeable of all write-off procedures, especially vehicle and home office deductions
- Truthfully report all income you have received
What Information Do I Need to Provide?
Prior to the audit, you will need to get every necessary financial document ready for an audit. It is essential you find out the year you are being audited for. Although the Internal Revenue Service (IRS) usually can audit returns at most 3 years after a tax return has been filed, they can at any time ask for an audit should it appears a tax payer was dishonest. Knowing the particular year you are being audited for would avert the time you would have wasted searching for unnecessary documents, or from appearing unprofessional by presenting financial records for a wrong year. This is also why tax advisors always suggest keeping income, tax and filing documents from previous years.
Although IRS officials might be performing their job, there is a possibility for some auditors to be aggressive. In such situations like this, the best thing is to employ the services of tax experts. To achieve this, you only have to stop the auditing temporarily while you request for an extension. There is nothing bad with hiring a tax expert and it does not mean you did something unlawful as it may be something you were not equipped to handle. Tax experts fully understand the process, laws and all tax-related jargon that can be very confusing. Getting help from a trusted tax advisor means you are likely to see the end of a frightening audit while your tax advisor works with you to solve issues with the Internal Revenue Service (IRS).