What It's Like to Be Audited by the IRS, and Tips for Surviving the Experience

What It’s Like to Be Audited by the IRS, and Tips for Surviving the Experience

December 8, 2020

No one likes doing taxes, and getting audited by the IRS sounds even worse. Although an audit may result in a higher tax bill, there are a few things you can do to keep your stress level (and your tax bill) down. Getting reliable tax audit representation in Hayward, CA is always a good idea, but you should also be familiar with different types of audits and what happens if you’re the “lucky” person who gets audited. Here’s a closer look at some of the possible types of audits to which you might be subjected:

  • Mail audits: Mail audits are the most common type of IRS audit, making up about 77 percent of all of their audits. They typically require you to answer questions or mail in information in response to their requests—for example, if you write off transportation to and from conferences, they may ask for receipts. (This is why it’s a good reason to keep your tax documents handy and organized for several years.)
  • Office and field audits: Office and field audits are much more in-depth processes. Not only will the IRS go over your tax returns to look for discrepancies, but they’ll also check out your business and lifestyle to make sure that everything is on the up and up. You’ll not only need to provide information to validate your itemized deductions and tax credits, but they’ll probably require a lot more documentation to ensure you’re not lying about income and assets. Only about 2,000 people are charged with tax evasion each year, so it’s unlikely that you’ll be one of them. On the other hand, if you’ve been playing fast and loose with IRS regulations, it’s a smart idea to hire representation as soon as possible.
  • CP2000 notice: Finally, you might get a CP2000 notice—the IRS sends these to people whom they believe to have underreported their income over the past year. There’s an additional tax burden associated, of course, but they usually happen when you forget to report your 1099 independent contractor income. The IRS sends about 4 million of these notices per year.

How likely is it that you’ll get audited?

Here’s the good news: less than one percent of filers are audited each year. Nine times out of 10, that results in a higher tax bill, but with the right kind of professional help, you should be able to reach a favorable outcome.

What to do if you’re audited

When the IRS audits you, the best thing to do is work with a great tax professional. They’ll help you provide documentation and evidence to prove your position, while ensuring you file responses completely and on time. If you can’t reach a good outcome, your tax professional can help you file an appeal.

Remember, although the IRS is scary to deal with on your own, working with a tax pro will allow you to focus on the important things—such as providing documentation—while they deal with the tax code and legalese.

For reliable tax audit representation in Hayward, CA, reach out to the team at Menjivar & Company CPAs, Inc.

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