No one enjoys being audited by the IRS, but if you find yourself in that situation, it’s important to be prepared. The best way to prepare for a tax audit is to keep good records throughout the year. This means keeping track of all your income and expenses, as well as any receipts or other documentation that can support those items. If you have a home office, be sure to keep detailed records of your expenses related to that space.
When it comes time to file your taxes, be sure to use accurate figures and complete all required forms completely and accurately. If you’re self-employed, make sure you report all your income and pay any estimated taxes that may be due.
If you do receive a notice from the IRS that you’re being what does a tax audit mean, don’t panic. Carefully review the notice to determine what specific items are being questioned. Gather any supporting documentation you have and make an appointment with the IRS auditor. Be honest and cooperative during the audit process, and if you disagree with any of the auditor’s findings, be prepared to explain why.
How to Defend Yourself during a Tax Audit
No one likes getting audited by the IRS. An IRS tax audit is when the IRS selects your tax return for review. This usually happens because your return was incomplete or inaccurate, but it could also be random. If you are selected for an audit, don’t panic. There are ways to prepare for and defend yourself during an audit.
The first step is to gather all of the documentation that the IRS will request. This includes your tax returns, W-2 forms, 1099 forms, and receipts. Organize these documents so they are easy to find and provide to the IRS auditor.
Next, you need to be prepared to answer questions about your income and deductions. The auditor will likely ask you to explain why you took certain deductions or made certain choices on your return. Be honest and straightforward in your answers. If you made a mistake on your return, admit it and offer to amend your return.
If the auditor requests a meeting, you can bring a representative with you, such as an accountant or lawyer. However, you should only bring a representative if you feel like you need one – there is no need to make the audit process more complicated than it needs to be.