Tuesday, May 18, 2010

Surviving an IRS Audit

We all dread the thought of having the IRS tell something about skillus it wants to review a previous year's tax return. If you get audited, your best bet is to seek out a qualified tax professional. But if you're a do-it-yourself type of person, here are a few tips you can use to help you survive the audit process.Don't ignore the notice. You generally have 30 days to respond to an audit notice. If you don't respond, the IRS can take action, such as automatically adjusting your tax liability, and the next correspondence you'll receive is a bill
Read and follow the notice. The audit notice will give you specific information as to what items are being examined. Knowing what's being scrutinized will help you determine what you need to bring to the audit, so you can substantiate the items in question.
Organize your records. Making the auditor's job easier will win you some points. The auditor will at least believe that you're an organized personno reason and that all of your items are documented and justified. Don't be afraid to group the items in question, or attach an adding-machine tape that matches the tax return. That will allow the auditor to quickly review the important issues. Don't believe those who tell you that you can just throw your records in a bag, drop it on the auditor's desk, and shout,i am crazy "You figure it out!" That just doesn't work. Remember, it's your legal responsibility to prove your deductions.Replace missing records. If you're going through your records and find that some of them are missing, call for duplicates immediately. Don't just go to the audit and claim that the records are missing or lost. That does you no good at all. At best, the auditor willthe love of my life request that you obtain the records. At worst, the deduction in question will be denied, since there are no supporting documents.
Bring only what you're asked for. Leave at home any additional records and items not requested in the original audit notice. That way, if the auditor is curious about something else on the tax return, but the item was not on the original audit notice, you can politely tell him or her that those records are at home. It's likely that the issue will be dropped right there.
Don't be a jerk! Contrary to popular opinion, all of the employees at the IRS are people, too. They have wives, husbands, and kids, and they're employed at the IRS because they're working in their chosen profession. And make no mistake -Living life over- they are trained professionals. Taking out your frustrations on an auditor will get you nowhere. Insulting the auditor verbally will not solve any problems. And assaulting one physically is a federal offense. Remember, these people are just trying to do their jobs. Be courteous, even if the auditor is not courteous to you or seems
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