What to Know for Your IRS Audit

On: May 9, 2020

To protect yourself during an IRS audit, there are some things you need to know. By not educating yourself and failing to prepare for an IRS audit, you leave yourself vulnerable to making a mistake, and when it comes to IRS audits, mistakes are never a good thing. Here is what you need to know for your IRS audit.

You are Not Necessarily in Trouble

IRS audits are not like getting called into the principal’s office, and they do not necessarily mean that you are in trouble. Usually, when you get audited by the IRS, it simply means that you failed to file some necessary paperwork or made a minor accounting error on your tax returns. There are basically three types of IRS audits: Audits by Mail: IRS mail-based audits are also called “correspondence audits” are quite common and usually are just simple request for more information or copies of certain records. Audits at an IRS office: Audits, where you are required to go in-person, can cover a variety of issues from big to small. Depending on your circumstances, it may be worth consulting with a qualified tax lawyer before going into your local IRS office. In-Person Audits: In-person audits, also called “field” audits, are rare and, frankly, they usually do mean that you are more seriously investigated. If you have an upcoming in-person IRS audit, it is usually smart to get your files in order, and possibly also get in touch with a qualified tax lawyer.

Preparing for an IRS Audit

If you are preparing for an IRS audit, you should thoroughly read and make sure you understand any correspondences that they may have sent you and then go about preparing your documents. You will need to show proof of income, and this can include paystubs, W9s, and other forms of payment receipts. Those along with any proof of the money you are spending, this can include receipts for expensive items such as those over $1,000. Also, you have access to your mortgage statement and a snapshot or statement of any other loan or payment that you make regularly.

Representation During an IRS Audit

If you are unsure or nervous about an upcoming IRS audit, you can hire representation in the form of a certified public accountant or a tax attorney. This is often a good idea if you have a complex tax situation or matters, you are otherwise unsure of how to handle it. With or without representation, though, it is important to keep in mind that you should always treat IRS agents courteously and with respect as doing the opposite will certainly not help your situation. You should also know that IRS agents do not have the right to invade all of your privacy. As a U.S. citizen, you have the right to certain levels of privacy. If you think the IRS is overstepping their boundaries and violating your rights, do not hesitate to seek representation. And always make sure to call Leading Tax Group and don’t attempt to do it yourself.