As you make your way to the mailbox these days, chances are good that your biggest fear may be a large credit card bill, a rejection letter for a job you really wanted, or an unwanted invitation.
In other words, the last thing you expect to see in your mailbox is an audit notice from the Internal Revenue Service. This makes sense, of course, as figures show the agency audits less than 1 percent of the tax returns it receives.
What happens, however, if you are among the very few unlucky individuals who do see a letter? As chilling as this is, experts indicate that it’s imperative to remain calm.
Am I really being audited?
While it’s easy to find yourself unable to open a letter from the IRS in fear of what might be found within, it’s important to pull yourself together and read its contents. That’s because it might not be an audit notice, but rather an adjustment notice.
An adjustment notice is simply a document informing you of an error/discrepancy between agency records and your tax records, and outlining changes being made to your tax bill.
Why I am I being audited?
If you really are being audited, there is really no definitive answer to this question. That’s because the reasons for the audit depend on the unique circumstances of the individual.
However, some factors that have been known to draw the attention of IRS examiners include:
- Mismatches between income reported on W-2s and income reported by the taxpayer
- Significant and unsubstantiated deductions
- Use of credit card statements as receipts
- Presence of many round numbers
How long will the audit take?
Again, there is no definitive answer to this question, as every case is different. If it’s a correspondence audit, for example, the process can take months, as the taxpayer and the IRS must mail documentation back and forth.
What am I going to need?
The audit notice will indicate what the IRS wants to see. In fact, it’s possible that only part of the return is being audited, meaning securing the records likely won’t be overly burdensome.
As a rule of thumb, experts advise maintaining tax records and supporting documentation for a minimum of three years.
Should I consider assistance?
A skilled tax professional can handle the entire matter, freeing you from any unnecessary fear and frustration, and granting you peace of mind. In fact, it’s possible that during the initial consultation, the tax professional may inform you that the matter is simple enough to handle on your own and provide the necessary instruction.
If you have concerns relating to an audit or questions about another tax-related issue, consider speaking with a skilled legal professional who can explain the law, outline your options and pursue solutions.