Even in cases where there are no problems and there is nothing to worry about, people can find themselves panicking at the thought of being at the centre of an IRS audit. While there is no guarantee that you can avoid an IRS audit, you can find ways of reducing the chances of being audited which is by avoiding the various red flags that could make you stand out to the IRS.
How Do I Avoid IRS Audits?
Most people dread the thought of being audited by the IRS.
What Is a Tax Audit?
What actually triggers a tax audit? The IRS flags tax returns each year based on discrepancies. For example, you may have claimed a high number of tax credits or deductions. The IRS may contact you to make sure you are entitled to all the deductions you claimed.
The agency may elect to examine your tax return in more detail for a variety of reasons. The ultimate purpose of a tax audit is to thoroughly inspect the return and verify that your income and deductions are accurate.
The IRS typically only bothers taxpayers with an audit if they believe information you entered on a return is incorrect. At this point, many citizens decide to hire a tax professional to represent them during an audit.
Tax experts who regularly work with the IRS already understand how the audit process works, for one thing. Furthermore, they have resources and contacts that may help you resolve the audit quicker than you would without representation.
If you’re facing an IRS audit, consider hiring a tax professional to guide you through the process. Levy & Associates wants to represent you! Contact us today for more information.
Ways to Avoid IRS Audits
Some of the ways in which you can help to avoid an IRS audit include:
Double check your return
Making silly and avoidable mistakes when filing your tax return could flag you up with the IRS, which in turn could result in an increased chance of being audited. You should therefore make sure you go through and double check your data and figures before you submit your return.
Be honest on your return
You should make sure you do not attempt to fudge the figures or outright lie on your tax return, as this is something that is more likely to get you noticed, particularly if you are a high income earner. You should make sure you are totally honest and then if you are audited you will have nothing to worry about.
File online
According to the IRS people are less likely to make mistakes with their return if they file online, which means that you are less likely to be targeted by the IRS for auditing if you file your return online.
Be realistic with deductions
It may be tempting to add everything you can think of as a deduction on your tax return but this could quickly lead to you being audited, as it will act as a red flag to the IRS. Make sure you are realistic as well as honest when it comes to deductions.
Can I Appeal a Tax Audit?
Have you ever filed your taxes and thought once you were done that was the end of it, only to be hit with a tax audit? Being audited can be an annoying and stressful time especially if you have already planned on how you are going to spend your check.
Something that is not common knowledge to most people is that you can in fact initiate your own audit defense by appealing a tax audit. Studies have actually shown that as few as 10 percent of taxpayers appeal their audits. A separate branch was created for situations just like this called the Office of Appeals, whose main goal is to provide a platform for taxpayers who feel as if they should not be audited to plead their case to the IRS by reviewing finished examination reports. It may be worth appealing an audit as it can sometimes reduce or even completely eliminate previously assessed taxes and penalties.
The best thing about appealing a tax audit is that your chances of winning are surprisingly high and if you owe money to the IRS, the appeal will delay the due date of your tax bill which can last for months. This will give you more time to get funds together to pay the bill or work out a payment plan.
What Happens When You Get Audited By the IRS?
The thought of being audited by the IRS is something that strikes fear into the hearts of many individuals and small businesses, although most larger businesses are well equipped to deal with IRS audits due to the resources they have on hand. It is worth bearing in mind that only a tiny percentage of individuals are audited by the IRS, which tends to focus more on large organizations and very wealthy individuals.
How Does the IRS Audit Happen? In many cases, auditing by the IRS takes place via post and in some cases it is just a case of being asked for additional documentation or supporting information to back up tax returns. This is requested via letter by the IRS and could result in a tax adjustment being made in relation to the amount that you owe.
Another type of audit that may be carried out by the IRS is an interview audit or examination. This is where you may be asked to attend the offices of the IRS and take along supporting evidence and paperwork that officers have asked for in support of your tax returns.
Another type of audit that may be undertaken is the field audit, which is where the IRS officers come to your home or business. This is sometimes used for small businesses or where the business is operated from home and would involve IRS officers sitting with you and going through paperwork such as invoices, receipts and any other documentation they require.
“Greg, Lance, Stephanie and team are some of the most amazing people I’ve had the pleasure of working with! They are on point when it comes to helping our crew out with our IRS tax issues! They saved our company and the owner so much money already! Thankful for Levy & Associates!!”
– Erica Dell“I had an IRS issue that no one was able to help me with. Someone recommended that I call The Levy Group so I did. They helped me with resolving a very difficult situation. I very thankful with what they were able to accomplish.”
– David CarpenterContact Levy & Associates for Dependable Tax Audit Services
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.