Every year, when you file your taxes, you incur a small amount of risk that your tax file will be one of those selected randomly for an audit. Certain red flags may increase the likelihood of facing an audit, but it is generally impossible to predict who will face scrutiny for their tax return and who will not.
If you receive a letter in the mail from the IRS advising you of a pending audit, don't panic. By following a few simple steps, you can give yourself the upper hand in what many people consider to be one of the most stressful experiences of modern American life.
Take immediate action
Procrastination is common when something seems particularly unpleasant or stressful. Obviously, an audit notice from the IRS is a very stressful letter to receive. However, that doesn't mean you will benefit from ignoring that letter.
You typically only have 30 days to file a written response to the IRS' initial communication. That means you need to look at your situation and make important decisions as quickly as possible.
Get your documentation ready
Sometimes, there are simple mistakes, like a transposed digit in a Social Security number, that cause the IRS to suspect additional tax liability. Your letter will explain what the IRS wants to review, which may require gathering your tax records, pay stubs and other household financial paperwork.
Don't try to go into this alone
For many people, trying to save a few dollars and handle a complex task without professional help is one of the major contributing factors to facing an audit. Filing your own taxes in a time with annual changes to tax code and policy can mean making a mistake that could result in a later audit.
Now is not the time to try to brush up on tax law. Most people will benefit from having the direct support of an experienced tax law attorney during an audit. Lawyers who work in tax law will understand what documentation is necessary and how to protect you from the worst potential consequences during an audit.
Prepare yourself to put your best foot forward
Although it is common to feel intense emotions including frustration and anger over dealing with an audit when you believe that you have paid your taxes in full, that doesn't mean you want to let the IRS know about your feelings. Doing so could be a disastrous mistake.
You want to come across as professional and reasonable during the audit. An attorney can help you cultivate the right appearance and demeanor and remind you to focus on the big picture during the audit process. Receiving an audit letter can be a stressful experience, but that doesn't mean that you have to succumb to that stress. The right help can make it easier to stand up for yourself during an audit.