Just mentioning the IRS can bring a person into a panic, let alone learning that they are going to be audited by them. Being told you will be audited by the IRS can be scary at first and there are usually a lot of people asking why they were chosen to be audited. The IRS will make this decision when you make math errors on your returns, fail to report income, claiming too many charities, claiming a home office deduction, and much more. When you are audited, the important thing to do is not panic and then follow these tips:
Take Your Time
Your first instinct will be to get this done as soon as possible to get it over with. Although time may be of the essence, it’s also important to not rush the process. You can postpone the audit by requesting more time in order to organize documents and records. This can very much work to your advantage. What many people do not know is that the IRS must complete an audit within three years of the time the tax return is filed, unless tax fraud or significant underreporting of income is involved.
Prepare and Research
The best thing you can do for yourself when you are audited is by preparing correctly and doing as much research as you can. This means research laws that pertain to your audit and even considering an attorney to help you. Reach out to your accountant and go through the Taxpayers’ Bill of Rights so you know what your rights are. In order to get the best outcome from this audit, you need to know your rights and the law, which an attorney and your account can be a great help for.
Understand Possible Outcomes
An audit is a very serious matter and it’s imperative you understand what possible outcome of yours could be. Remember that less than 25% of taxpayers avoid paying additional taxes after they are audited. It’s an unfortunate truth that the odds are against you in an audit. This is why it’s a good idea to consider negotiating with the auditor to limit damages.