If the three letters IRS give you nightmares, you’re not alone. The fear of the IRS is a common emotion and one that will send chills down your spine. The good news is the chances of being selected for an IRS audit are relatively low. However, that doesn’t mean it won’t happen. Therefore, we would like to give you some tips on how to prepare for an IRS audit.
Should You Hire a Professional Tax Attorney or CPA?
An IRS tax audit is a very long and stressful process. In addition, understanding the tax code, for most people, is like trying to read a foreign language. It’s extremely difficult, unless you know what you’re doing. Hiring professional representation will ensure that you have someone representing you who has been educated in tax law and will be better able to speak for you than you could for yourself. Additionally, people sometimes unwittingly reveal too much information, information that isn’t required and that could potentially do more harm than good.
Gather All Your Documents In Advance
Having the proper documentation is essential when it comes to an IRS tax audit. You’ll need to gather all your bills, your receipts, spreadsheets, mileage logs and previous tax returns for the past three years. If you haven’t practiced good record keeping, try to go back and recreate those records as accurately as possible. You may need to contact your doctor, your employer, your mortgage company, the county, etc. to obtain the documents you need for your audit. Organize all your documents neatly and create a summary with the supporting documentation attached.
If you find that you don’t have enough time to gather the documents you need, call the IRS auditor well in advance and request an extension. The IRS will generally grant you an extension if you give them reasonable cause.
Be Pre-Prepared If You Will Be Representing Yourself
If you’ve chosen not to hire professional representation, you need to thoroughly prepare yourself for the audit. Interview as many people as you can who have already been through an audit. Ask them about the audit process, how they prepared themselves, what to avoid, what types of questions the auditor asked, etc. Additionally, the IRS provides its examiners with an audit guide and many times you will find these guides posted on the IRS website. You should obtain as many of these as you can and study them thoroughly.
You should always conduct yourself in a professional manner. Make sure you’re on time to your audit. Be polite and answer all the auditor’s questions. But don’t offer any information other than what they have directly asked of you. In addition, you should dress professionally, don’t show up in your tattered blue jeans and a dirty shirt. Don’t forget to bring all of your receipts and the necessary documentation. It’s not a good idea to bring a shoebox full of receipts. You should have your receipts separated and organized properly.
Just remember that the IRS is not your friend. The IRS auditor is there with the assumption that you have probably done something wrong, whether you have or not. Be polite, remain confident and never act fearful. Additionally, you should answer his questions honestly and accurately but don’t offer any information other than what you’re asked. We can’t stress this enough.
The audit process will take some time; therefore, you shouldn’t plan anything else on your scheduled audit day. You never want to come across as rude or impatient and you want to make sure you turn off all your electronic devices while in the meeting. Fortunately, not all IRS audits will result in you owing more money in taxes. In fact, sometimes they reflect that the IRS owes you money instead. Sit back, relax and remain confident. You, like those who’ve gone before you, will get through this!
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