No one wants to receive a letter from the Internal Revenue Service, better known as the IRS. Especially if the letter tells them that they are about to be audited. But once you realize that the news might not be nearly as bad as you think, you could rest easy knowing that you could handle almost anything the IRS throws your way.
Not all letters from the IRS mean that you’re being audited. For example, the IRS could be letting you know that you made a math error on your tax return. In circumstances such as these, these are errors that you can easily correct. But if you’re actually going through an audit, you can still come out of it on the other side intact. In this article, you’ll learn how to get through an IRS audit.
Hiring a Professional
If you need to go through an IRS audit, the first thing you should do is hire a tax professional. Certified public accountants, tax attorneys, and enrolled agents are a few of the people that can represent you or your business at an audit. These professionals have received a lot of training in tax law. They are in a much better position to help you deal with the IRS than you. To most people, reading tax law is like reading a novel in a foreign language. It’s a good idea to hire one of these professionals the second you find out you’re getting audited.
Always Keep Good Records
When doing your taxes every year, it’s not enough to dredge up all your receipts from the previous year. Keep great records throughout the year and create a filing system that will add your records for the appropriate tax return. If you’re ever been audited, then you will be prepared. CPA firm Squar Milner tells readers that they should do everything in their power to get the records needed for your audit. Even if your business office got destroyed in a flood or fire, the IRS will still expect you to come up with your required documents. Squar Milner tells readers that they should not only recreate these lost documents, but that they should also keep track of their efforts to get these papers.
Take Time to Gather All Of Your Required Documents
Didn’t keep the best records for the previous tax year? You still might be able to salvage the situation. Go back and recreate as many of your required documents as possible. For those who claimed an expense in certain types of areas, like medical costs, you might be able to ask your physician or hospital for help. In this example, these professionals or institutions might have your records on file. If you need another copy of your W-2 or 1099, you can talk to your employer. Make sure all of your documents are placed in a neat, readable format. Ensure that there’s an included summary with supporting documentation. Take these papers to the audit with you.
eFile.com states that you should follow the directives of your audit notice as closely as you can. For example, the IRS will set the time and date for your audit. It’s vital that you show up for the audit at the date and time set in the letter. If you can’t get to the audit at the set date and time, contact the IRS immediately for an alternative option.
It’s also important to present yourself and your documents in a professional manner. Don’t wear jeans and sneakers to the audit. Don’t bring a shoebox full of receipts into the audit meeting. Doing all of this will better ensure that you get a good result from the audit.
Preparing for a tax audit doesn’t have to be an (entirely) negative experience. While it won’t be the most fun part of your life, you can often get a good result if you do everything in your power to prepare yourself. Some diligence and professionalism practiced beforehand can be the difference between owing thousands of dollars and either not owing as much as you might have thought or even owing nothing at all.