How to survive an Audit?

All you did was make a lot of money and what does Uncle Sam do to reward you? He wants to audit you. In the IRS’s opinion, the reason you are getting audited is because you are claiming too many credits or deductions. Most people who get audited are not trying to commit a fraud but make a mistake in reporting their income or had a below par tax preparer. Once you do get audited following are some tips to follow:

  • Don’t have it at your home or office
  • Don’t be under prepared or over prepared. Meaning don’t forget to bring the paperwork that the auditor requested and don’t bring paperwork that the auditor didn’t request like prior year’s tax returns that can further implicate you in something
  • If you are afraid of making a mistake, consult a tax professional or have one accompany you
  • Don’t be overenthusiastic about meeting your auditor. Even though this may not appeal to your common sense try to delay your audit as long as possible because it usually benefits you in the end
  • IRS should audit you within three years of filing your tax return
  • If you feel uncomfortable with the auditor because he seems unfair or doesn’t let you explain your side of the story fully, ask to speak to his or her manager
  • Don’t start negotiating taxes you owe like an old woman crying over the price of a cantaloupe at a neighborhood supermarket. What you can do is discuss your tax issues and see which one you both can agree on and which ones you disagree? If you treat the auditor with respect and patience, and you might walk away with less taxes owed
  • Don’t expect to walk away from an audit with clean hands. Most people end up with a tax bill, so be prepared
  • Owing money is not the end of the world; you can still appeal the decision to the IRS, or the tax court