If you’re selected for an audit from the IRS, don’t get too twisted up about it. You were either chosen randomly by a computer system or the numbers in your tax return didn’t look right, and it caught the IRS’s attention. An IRS audit shouldn’t throw you into a panic, but you should take it seriously.
What is an IRS audit?
So, what exactly is an “audit”? The word itself sounds a little scary, especially with “IRS” parked in front of it. Basically, it’s a review—a more in-depth examination—of your finances and accounts. The goal of an IRS auditor is to double-check that the numbers you plugged into your tax return are accurate. An auditor can do that by looking directly at your financial documents.
If you’re chosen for an audit
Should you be chosen for an audit, the IRS will mail you a notification with further instructions. They might ask for a list of documents or designate a meeting time and place (that is if you’re meeting with an auditor in person). Rest assured, the IRS has a solid process in place so that any discrepancies on your tax return can be resolved as quickly as possible.
The result of an IRS audit
There are three possible outcomes of an IRS audit:
- No change (you’ve provided sufficient evidence to back up the information on your tax return)
- Agreed (the IRS has suggested changes with which you agree)
- Disagreed (the IRS has suggested changes with which you disagree)
You can, however, reduce your chances of being chosen for an audit by developing a few good habits.
How to avoid an audit
- Keep your receipts. It’s something you learned when you were a kid. Guess what? It still applies to you as an adult. If a paper trail drives you crazy, consider scanning your receipts and keeping digital files instead.
- Organize your records. Develop a filing system—digital or otherwise—that works for you.
- Be accurate when reporting your income. List all your sources of income, and know what you can deduct or claim as a credit. Though it seems cut and dry, taxpayers still make errors.
- Arm yourself with knowledge. Tax laws change all the time. TaxSlayer is keeping track of the new tax laws, but you can take charge and sign up with the IRS to get all the news delivered to your inbox.
- Have a professional in your corner. Some people use accountants. Others use tax or financial advisers. It’s good to have in your corner an expert who can guide you or provide resources when you don’t know where to turn.
Here at TaxSlayer, Audit Assistance is part of our Premium and Self-Employed packages. In the event of an IRS audit, TaxSlayer is here to help. We’ll work on your behalf to resolve the problem as quickly as possible.