Tax Audits: What You Need to Know
Paying taxes is a necessary yet rather confusing aspect of life. Just when you thought you were diligent enough with your previous returns, it comes back to haunt you in a form of an IRS letter regarding a tax audit. Now before you go into full panic mode, let’s discuss why some individuals get their taxes audited and how you can deal with it when it happens.
Reasons Why You Are Being Audited
The IRS usually examines returns from the last 3 years for most people, so it can initially come as a shock when you learn about it. What you don’t realize is that tax audit notices aren’t necessarily scary or alarming as you think, as it identifies the reason/s why you received it. The reason could be as mundane as a missing document or two, which is pretty quick to resolve. However, there are other grounds that can trigger an investigation of your tax history. Discrepancies, undeclared income, or even getting picked via random selection can be the cause for further examination of your returns and financial records by the agency.
What to Do During Your Tax Audit
Full preparation is your most important weapon when you and your tax records are being examined. Start with reviewing your previous tax return on your own to get a better picture of what the auditors will look at. You should also gather all of the documents that will support your case including previous returns, W-2 forms, paystubs, proof of donations and receipts before you are called to an IRS office or during a field visit.
If you have someone who prepares your taxes, revisit your statement together and ask their advice on what approach to take during the meeting with the auditors. Make sure that all income and funds are accounted for and don’t leave out any important detail or gaps as much as possible. Auditors will notice it and see that you have done your part in clearing up your records. If you need additional help on dealing with your tax woes, the IRS also allows you to have someone represent you as your attorney during the meeting session through their Form 2848.
Avoid it From Happening Again
Once you have cleared your name and records to the authorities, you need to put out extra steps to avoid hitting a bump with your tax returns again. It’s a good thing that there are more solutions that can help you keep better track of your records on your own digitally, whether through a desktop, online or mobile app without having to resort to pricey services. Choose the option that works best for you and your taxes so you can hopefully avoid receiving auditing mail from the taxman in the future.
This article is written by YouTubetoMP3Shark for AdviseHow.com.