Categories
Finance

What Is an IRS Audit?

What is an IRS audit? Are you worried about it?

Before you go all-in on your taxes, you need to know what an IRS audit is. Knowing your rights and responsibilities can keep you from making costly mistakes.

In this guide, we’ll cover the tax audit process and what you can do to prepare for one. From speaking with a tax professional to ensuring all of your documents are in order, we’ll walk you through all the steps you need to take before an IRS audit.

Keep reading!

What Is an IRS Audit?

An IRS tax audit is an examination of an individual’s or organization’s accounts and financial information to ensure accuracy and compliance with tax laws.

The IRS can initiate an audit through field audits, correspondence audits, or random sampling. An IRS audit can be triggered by something as small as a math error on a return. The IRS does not have to have a reason to select a taxpayer for an audit.

What Is the Process of an IRS Audit?

Audits are conducted to verify the accuracy of your tax return. The IRS can select your tax return for an audit through a computer screening, or if your return is incomplete or inaccurate. An audit may also be triggered if you underreport your income by more than 25 percent.

If you’re selected for an audit, the IRS will notify you by mail. The notice will state the type of audit being conducted and the issues being examined. The IRS will also request supporting documentation for the items being questioned.

You can respond to the notice by mail, or in some cases, you may be able to schedule an in-person meeting with the IRS auditor. During the audit, the auditor will review your documentation and may ask additional questions.

After the audit is complete, the IRS will issue a report detailing the results. If the auditor finds that you owe additional taxes, you’ll be required to pay the amount due plus interest and penalties.

If the auditor finds no change is required to your tax return, you’ll be issued a letter stating that the audit is closed.

What Are the Consequences of an IRS Audit?

An IRS audit is when the IRS reviews your tax return to ensure that you have reported your income and taxes accurately. The consequences of an IRS audit can be significant, especially if you are found to have underpaid your taxes.

You may owe back taxes, interest, and penalties. If the IRS believes that you have committed tax fraud, you may be subject to criminal charges. Speak with a tax attorney if you need legal help.

Learn More About IRS Audit Today

This article discussed what is an IRS audit and the basics that come with it.

An IRS audit is when the IRS reviews your tax return to make sure everything is accurate. If you are selected for an audit, the IRS will send you a notice in the mail. The notice will list the items on your return that are being audited.

You will need to provide documentation to support your position. If you do not agree with the findings of the audit, you can appeal the decision.

Did you find this article helpful? Check out the rest of our blogs!

Exit mobile version