Facing an IRS Audit? Here’s Your Immediate Action Plan | Global News Avenue

get one audit A letter from the Internal Revenue Service (IRS) can be stressful, but it doesn’t mean you’ll get into legal trouble.

Tax lawyer says: ‘Don’t panic’ Alyssa Maloof Whitley. “A lot of people are scared and not participating. That’s a mistake. Stay calm, be rational, read the notices, and stick to deadlines.”

Why am I being audited?

Most people get audited because their tax returns are flagged by an IRS computer program. This usually occurs when the information on file with the IRS, such as wages reported by your employer, does not match the information entered on your tax return. “For most of these cases, you don’t need a lawyer,” Whatley advises. “You just need to respond to the missing information before the deadline.”

Some red flag It may also trigger an audit. “If you’re going to take certain positions on your tax returns, you could be increasing your risk of being audited,” Wartley warned. These may include self-employment or claiming refundable tax credits.

Getting a tax refund does not guarantee you will be audited, and you can still be audited even after you get your tax refund Receive a refund. Although an amended return may also be selected for audit, an amended return cannot be filed.

What to do if you receive an audit letter

An audit always begins with a letter from the IRS. Knowing what steps to take will help you stay calm and keep track of everything you need.

1. Read this letter carefully. Determine the tax year being audited and whether the numbers used by the IRS match the numbers on your tax return.
2. Gather your documents. this The letter will outline what information the IRS wants. This may include receipts, bank statements, employment documents, and tax forms (such as W-2s). Make copies of everything the IRS requires and keep the originals.
3. Keep records. Keep copies of all communications with the IRS, including phone records.

Your review letter should include a phone number that you can call to check the status of your review.

What happens next will depend on whether your review is by mail or in person.

Letter review

one Letter review is the most common type of audit. All aspects of the audit are conducted by mail, including sending documents to the IRS.

1. Send your files. If you mail documents, use a delivery confirmation service so you know they have been delivered.
2. Meet your deadlines. Send your response to the IRS by the date stated in the letter. If for some reason you are unable to meet the deadline, contact the IRS immediately to request more time.

Review in person

On-site audits are sometimes called office audits or on-site audits. This is an interview at IRS office or other location.

1. Check exam dates. If this date does not suit you, please contact the examiner immediately to request an alternative date,
2. face to face interview. You may be accompanied to the interview by a tax attorney or accountant. The examiner may ask about your income, Deductionbusiness operations, and other portions of your tax return. Keep all supporting documents with you.
3. ask yourself questions. If you want professional help, you can always ask for clarification or ask to put the interview on hold.
4. Provide follow-up documentation. If the examiner requires any additional documents, you can send them by mail.

How to get audit help

“If you don’t know what you’re doing, it’s important to ask for help,” Wortley said. “But don’t be taken advantage of by unqualified people who claim to be helping you.”

If you can afford to hire help, find a reputable tax attorney or certified financial planner who specializes in tax preparation and auditing. If you can’t afford representation, Whatley recommends using a taxpayer advocate service. The IRS also runs Tax clinics for eligible low-income taxpayers Who needs audit support.

what happens next

If you owe more in taxes, you will receive a bill. you can pay tax bill You can pay the entire amount at once, or you can ask for installments with your consent. If you disagree, you can request a meeting with an IRS manager or follow the steps provided in the findings letter to appeal.

If the IRS reports no changes to your tax return, you don’t need to take any additional action.

bottom line

One thing you absolutely should not do is ignore any part of the review process. If you don’t respond to the audit letter or pay any additional taxes owed, you could face fees, fines, and even wage garnishments.

It’s good to know what to do if you’re ever audited, but most taxpayers will never need to follow these steps. Of the millions of tax returns filed each year in the United States, only about 0.3% are audited. That number rises for individuals earning more than $1 million, but even then it’s still less than 2%. Most middle-class and low-income taxpayers will never be audited.