Your first instinct when you learn that the IRS is auditing you may be to panic. An IRS audit might sound intimidating, but it is actually straightforward. Understanding the process could help ease your anxiety and prepare you for what will come.
It is essential to know what you can expect during an IRS audit. Doing so may help you navigate it successfully.
Types of audits
The IRS conducts the following types of audits:
Correspondence audit
The IRS typically conducts this audit entirely through mail. You will receive a letter requesting additional information about specific items on your tax return.
Office audit
This type of audit requires visiting a local IRS office to discuss your tax return in person.
Field audit
For this type of audit, one should expect a visit from an IRS agent to your home or business to examine your records.
Regardless of the type, you usually have 30 days to respond to the initial notice. This should give you time to prepare your response.
Preparing for your audit
Ample preparation is critical in ensuring that your audit goes smoothly. Below are steps you may consider:
- Gather all relevant documents: This includes receipts, bank statements, and any other records that support the items on your tax return.
- Review the audit letter carefully: Ensure you understand the specific information the IRS requests.
- Consider professional help: If you are feeling overwhelmed, you might want to consult an attorney. They can help you better understand the process.
- Be honest and cooperative: Transparency is vital during an audit. It may be best to provide all requested information promptly and truthfully.
Remember, an audit does not necessarily mean you have done something wrong. Sometimes, they select returns randomly or because they relate to issues or transactions with other taxpayers whose returns were selected for audit.
While audits can be stressful, preparing for them and understanding the process could make them much more manageable. By staying organized, seeking legal advice, and maintaining open communication with the IRS, you may be well-equipped to manage whatever comes your way.
