| Many people start to panic after they find out that the | | | | second type of audit is called an office audit and only |
| IRS has selected their tax return to be audited, but an | | | | happens if you have a sole proprietorship that makes |
| IRS audit is nothing to be afraid of. It does not mean | | | | under $500,000 a year. The other two audits are |
| that they are out to get you and that they know you | | | | reserved for bigger companies and it won't concern |
| have broken some kind of tax law. IRS audits are | | | | regular people with one income. |
| usually chosen by a computer program the IRS uses | | | | The first thing to do after asking why you are being |
| to insure useful auditing. The computer will add up | | | | audited is to respond to the IRS agent in a timely |
| some statistics regarding deductions and expenses, | | | | fashion. This does two things. It shows the agent that |
| and if the return has some mistake or has unusually | | | | you don't have anything to hide and it will reduce the |
| high expenses or an unusually low gross profit margin, | | | | amount of time the agent has to look over your file |
| you might get audited. Using tax services like H&R | | | | and find a mistake. |
| Block will also greatly reduce the chances of an audit. | | | | During the audit, it is important to be organized and |
| A small percentage of people are also chosen by the | | | | promptly give only the documents that they require, |
| IRS because they are associated with a specific firm, | | | | answering briefly but truthfully any questions the agent |
| or they are related to others who are being audited. It | | | | asks. Also, never give the agent the only copy of any |
| is recommended as a first step to ask why you are | | | | documents and don't exchange casual conversation |
| being audited so you can start to calm down. | | | | because it might give the agent more information |
| There are four types of audits that the IRS performs. | | | | about you. Lastly, try to ask for any copies of |
| The most common audit on an individual is a simple | | | | documents that you sign. |
| correspondence audit that just requires you to send | | | | An individual's income tax may be difficult to file and will |
| copies of canceled checks and/or receipts in order to | | | | have complicated details that an ordinary person may |
| verify certain deductions on your return. If you filed an | | | | have trouble with. An audit is nothing to worry about |
| online tax return, you will get this kind of audit. This is | | | | unless you really have something to hide and the most |
| usually nothing to worry about and even if they catch | | | | important thing is to stay calm. |
| inconsistencies, it doesn't land you in trouble. The | | | | |