So, it finally happened; you received a much-dreaded auditing letter from none other than the IRS. Your first instinct would be to panic and worry about them finding something illegal in your earnings or paperwork.
But before you start planning for your impending doom or spending your life living behind bars, you should stay calm, relax and understand that the analysis is a routine procedure that can generally be resolved by simply presenting the accurate paperwork.
Knowing what to expect during these situations can help you promptly address any errors, handle numerical discrepancies in your paperwork, communicate respectfully with the IRS agents, complete the process without any stress and hopefully keep you out of trouble.
Reasons you may be audited
When the IRS contacts you, you might assume it implies suspicion of illegal income or criminal activity. However, there are other reasons you might be audited or contacted by the IRS.
Doing your taxes is a complicated process that involves evaluating financial documents, and you’re prone to making errors or compiling your paperwork incorrectly, but that doesn’t mean you did something intentionally, and the IRS is out to get you.
The IRS’s random selection and computer screening process chooses taxpayers based on a statistical formula. It helps them determine your tax returns against “norms” for similar returns; you may be audited if your return doesn’t follow the same pattern.
The IRS might also contact you if you have unreported income, unusual deductions, rental losses, hobby losses, foreign currency bank accounts, and more.
How to prepare for an audit
When the IRS contacts you, it’s by mail or telephone and never through an email, so be sure not to fall for any scams. The mail will provide you with specific information that needs to be examined and a list of supplementary documents you may need to present.
You’ll be given around a month to respond, and it’s best to address it as soon as you receive it instead of wasting your time and getting the IRS suspicious for no reason.
Before an audit, get all your paperwork in order, find any discrepancies and start looking for tax professionals or agents to help you out, review your tax returns, paperwork and provide tax resolutions. If you’ve misplaced certain records or documents, immediately call the respective authorities and request duplicates.
Other things that might help your cause are, keeping tax returns and records in one location, saving your checkbook registers, keeping evidence of all your deductibles, and lastly, working with a tax service and resolution company.
If you’re looking for a reliable accounting and tax company in West Palm Beach, we’re here to help!
At Advanced Tax Defense and Accounting, we offer tax planning, preparation services to help you keep track of your financial records and stay out of trouble with the law. We have a team of taxation professionals ready to provide solutions, solve IRS Tax Problems, and meet all your needs.
For more information about our service, feel free to reach out to us!