For many people, an audit by the IRS is among their greatest fears. The media loves to make an audit seem like a nightmare that can only have a negative outcome for the person under scrutiny.
However, with the right help and a careful review of your financial records, going through an audit does not need to be an overwhelming or stressful experience. An audit is simply an attempt by the Internal Revenue Service (IRS) to determine whether you accurately reported your tax liabilities and paid what you should have when you filed your text return.
Many audits end without any negative consequences for the taxpayer involved. Once you understand what the process of an audit entails, you will feel empowered to handle your pending audit.
Audits involve providing financial records directly to the IRS
The biggest part of an audit will involve reviewing and gathering financial records. The IRS is usually clear about what documentation they require to conduct their audit. It can sometimes take a bit of effort to track down and organize all the necessary paperwork. However, once you have it, handing it over may be the final step in the process.
For roughly 75% of those facing an audit, the entire process gets handled remotely, meaning they simply mail in the documents that the IRS needs to conduct their audit. Then, they wait for a response letter from the IRS informing them of the outcome of the audit.
In-person interview audits can be a stressful experience
For the remaining 25% of people facing an audit, they will have to go in person to meet with an IRS representative and go over their tax situation. It can certainly feel intimidating to have to sit down with a representative of the United States government who might realize that you haven’t paid your fair share of taxes.
Still, simply getting called in for an in-person interview does not mean that the audit will not go in your favor. Instead of letting your fear and stress control how you respond, it makes more sense to try to be practical in your approach to an audit in order to minimize its impact on your life and finances.