In the big scheme of things, only a small percentage of taxpaying Americans have the IRS audit their tax returns. However, finding out that you are now the subject of an audit may prove stressful and anxiety-inducing. It may help calm your nerves to recognize that most audits do not involve IRS representatives showing up at your house and examining your financial affairs with a fine-tooth comb.
On the contrary, the majority of audits the IRS initiates take place through the mail, meaning that you may never actually have someone show up at your house to audit you. Still, understanding what could potentially lie ahead as you navigate the audit process may make things easier and more manageable for you.
Audits by mail
The Motley Fool reports that about three-quarters of all IRS audits take place via mail. If you undergo this type of audit, you may need to produce certain types of documentation to back up assertions made when filing your taxes. If you do not end up having the IRS audit you by mail, the service may request that you take part in either an in-office tax audit or a field one.
Other types of audits
An in-office audit, as the name implies, involves you attending a meeting at a local IRS office so that you have an opportunity to present the documentation the IRS requests in person. In many cases, taxpayers elect to have accountants or attorneys present for in-office audits. The third type of audit, the field audit, is the one that many taxpayers fear most. It may involve an IRS agent coming to your house to assess your situation and make sure that everything you reported was accurate.
While becoming the subject of an audit may give you cause for concern, try not to panic until you have all the information. In some instances, audits may prove quick and relatively painless, so you may spend time worrying over nothing.
