Even though your chances of getting hit with an IRS audit are pretty dang low, the possibility still exists. While it can be stressful, there’s also no need to panic.
As long as everything is on the up and up, getting through an audit is just a matter of knowing what to do. Unfortunately, there’s no quick and easy guide on how to do that. Until now.
Here are 5 steps to take if you’re facing an audit.
1. Confirm the Audit Request Came From the IRS
When it comes to scams, impersonating official agencies is one of the oldest tricks in the book. Tax based scams are a tried and true method of cheating people out of their money, so it’s important to make sure the audit request is legit.
Typically, a verified letter from the IRS will be the first way you learn you’re being audited. If you receive a call or email and not a letter, chances are you’re being scammed.
If you’ve got any doubt, get in touch with IRS personally to verify it. They’ll have records if the audit is indeed legit.
2. Learn What an IRS Audit is
Although the process itself can seem complicated, the actual fact of the matter is simple. An audit is simply the IRS comparing the tax information you provide to your records. This is to make sure that what you’re reporting matches up with the actual figures.
It’s possible you could be randomly selected for this process. In other cases, there may be something that raises a red flag. Even if the latter is true, it could be something as simple as an oversight on your part, so don’t panic.
3. Find Out How You’re Being Audited
As if it weren’t confusing enough, the IRS can audit you and in a number of ways. Sometimes, you’ll just need to gather some paperwork and mail it. Other times, you might have to meet at an IRS office to discuss the matter in person.
More rarely, an auditor may come to your home or business, but this is rare. The letter you receive will come with instructions, so be sure to read it carefully in order to find out what the IRS needs from you.
4. Meet With Your Money/Tax Folks
If you have people who help you with bookkeeping, finances, taxes, and other money-related issues, it’s important you meet with them right away. If you don’t, you might want to consider it.
Professional help during an audit can be invaluable. It’s easy to get complacent in a time where technology has made it possible to fill out a W2 online or check your credit whenever you want, but in actuality, financial issues can still be pretty confusing. It never hurts to ask a pro.
5. Get Your Books in Order
Last but not least, you need to make sure all your documents are in order. After all, getting through this audit depends upon you being able to provide accurate and honest information about your business.
Make sure to have several copies of important documents. Also, keep them filed in such a way that they’re easy to locate and access. Having a thorough paper trail will make everyone’s job much easier, and it will increase your odds of getting through this audit with no hiccups.
Audits Aren’t the End of the World!
When it’s all said and done, an IRS audit is a pain, but it’s not so bad. If everything is done by the book, you won’t have any trouble at all.
But it’s imperative that your bookkeeping is up to snuff, and having the proper forms is key. If you need some custom forms and documents for your small business, !
