Nearly 30 Years Of Positive Results

Photo Of Chaya Kundra

7 myths about IRS audits

On Behalf of | Apr 19, 2016 | Audits |

Back on March 8, we shared some potential red flags on your federal income tax return that raise your chances of having the IRS audit you. There is a lot of advice about how to avoid an audit out there, some of it accurate, some of it false.

Today, we will share seven common myths about how the IRS operates, as shared by TIME:

1. E-Filing causes an audit. The vast majority of taxpayers now e-file, so few seem to be afraid of being audited for this. The IRS says that handwritten returns are 20 times more likely to contain a mistake, so if anything, the opposite would be true.

2. Filing late causes an audit. It is unclear if this is true, but some believe that getting an extension instead of rushing to file at the last minute gives taxpayers a chance to fill out their return more accurately.

3. Amending your return causes an audit. The IRS denies this. Second returns receive the same scrutiny as initial returns.

4. The IRS will come knocking. While the IRS sometimes schedules examinations at the taxpayer’s home or workplace, 70 percent of audits occur entirely by mail.

5. The IRS never calls. Usually, when someone claiming to be from the IRS calls on the phone about a potential audit, it’s a scammer. But agents do sometimes call. So if you get a suspicious call, ask for the caller’s name and extension and call the IRS at 800-829-1040.

6. The IRS gets suspicious when you take a lot of deductions. A long list of deductions will not trigger an audit, but some unusual deductions compared with those taken in similar returns might.

7. If the IRS sends you a refund, you won’t get audited. The IRS will sometimes send out a refund check just to avoid paying interest to the taxpayer for a late refund. This does not mean it will never audit that return. The agency has three years to audit returns for standard errors, and up to six years for major mistakes.

If you are ever audited, it is not the end of the world. But you may benefit from having a tax lawyer advocating for you, which may reduce your tax liability and end the audit more quickly.