One of the best ways to avoid income tax audits is to process a return that never warrants an audit in the first place.
Tax audits occur to only 1 percent of all tax returns. If you accurately and neatly file your tax return, it’s very unlikely you’ll ever face an income tax audit in the first place. Always use specific numbers, and avoid rounding off, which can result in numbers that sound more like guesses than accurate presumptions.
If you do face an income tax audit, don’t ignore it. Get tax audit help as soon as possible, ideally from a legal tax attorney. This should be done before you even communicate with the IRS or provide them any documentation. It’s best to have someone on your side who knows the tax code in and out.
Don’t ignore the tax notice. You have only 30 days to respond to a notice for income tax audits. If you don’t respond, the IRS can adjust your tax liability, resulting in a bill.
The IRS should tell you up front what areas are being scrutinized. This will give you time to provide the proper documentation. In the world of tax law, you are guilty until proven innocent. No deduction is legitimate unless you can provide proof for it. Every deduction needs a receipt or other substantiation. Most tax attorneys can provide the legal paperwork to document expenses in the case of missing receipts.
Get organized. Making the tax auditor’s job easier will earn you big points. The more organization you provide, the more willing your agent is willing to trust deductions and other expenses.
Replace any missing records. Ask for a duplicate copy for anything you don’t have. Every deduction you make will have to be proven with a receipt. Simply claiming you don’t have it will only result in the deduction being denied and you having to pay.
The best advice for tax audit help is to call in the professionals, especially an attorney who specializes in tax law. Unlike a tax group, communications between an attorney and a client enjoy attorney-client privilege and enjoy privacy protect in court. They can help you prepare your case for the IRS, as well as fine hidden potential deductions that could result in a refund. With professional help, an income tax audit goes smoother and may even result in more money in your pocket.
