As your income gets higher, so do your chances of being audited. The lower your income, the less chance you have of being subjected to IRS audits. The average American’s chances of being audited are actually less than 1%. Some of the areas that are subject to further examination include:
If you take all of your tax deductions, you may also be audited, but if you haven’t done anything wrong, you have no reason to be concerned.
It is also possible that the computer has selected your tax return for audit. Each return entered into the IRS computers receives a numerical score. If your score is high, then you will probably be audited. The score depends on several factors, such as:
You can ask the reasons for the audit, as there are many reasons, such as business relationship with someone else that is being audited or as part of a special group. There are several kinds of IRS audits. These are:
When you receive notification of an audit, you have to be organized and have all the appropriate paperwork and documents in order. You only have to supply the documents the IRS requests and you should never give additional information. Make sure you answered all questions honestly without going into detailed explanations. Always have copies of documents and keep one for yourself. Never give the IRS the only copy that you have of a receipt or other form. Remember to stay friendly at all times.
You can have a tax attorney help you through the audit process. This person can act as your representative and is able to remain calm in situations where you might get upset and make things worse. You should never sign anything unless you fully understand and agree with what the document contains and any repercussions that it may have on you.
When the auditor reaches his/her decision, you can agree with it and pay the bill. If you do not agree with the findings, you have the option of appealing the decision. The main thing is that whether you prepared your tax return yourself or paid someone to do it for you, the final responsibility for ensuring that everything on the form is correct rests with you. It is also your responsibility to maintain accurate records of everything that you list on the form, whether it is income, expenses or deductions.
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