Tips on How to Survive an IRS Audit  

by Natalie Aranda

Many people start to panic after they find out that the IRS has selected their tax return to be audited, but an IRS audit is nothing to be afraid of. It does not mean that they are out to get you and that they know you have broken some kind of tax law. IRS audits are usually chosen by a computer program the IRS uses to insure useful auditing. The computer will add up some statistics regarding deductions and expenses, and if the return has some mistake or has unusually high expenses or an unusually low gross profit margin, you might get audited. Using tax services like H&R Block will also greatly reduce the chances of an audit. A small percentage of people are also chosen by the IRS because they are associated with a specific firm, or they are related to others who are being audited. It is recommended as a first step to ask why you are being audited so you can start to calm down.

There are four types of audits that the IRS performs. The most common audit on an individual is a simple correspondence audit that just requires you to send copies of canceled checks and/or receipts in order to verify certain deductions on your return. If you filed an online tax return, you will get this kind of audit. This is usually nothing to worry about and even if they catch inconsistencies, it doesn't land you in trouble. The second type of audit is called an office audit and only happens if you have a sole proprietorship that makes under $500,000 a year. The other two audits are reserved for bigger companies and it won't concern regular people with one income.

The first thing to do after asking why you are being audited is to respond to the IRS agent in a timely fashion. This does two things. It shows the agent that you don't have anything to hide and it will reduce the amount of time the agent has to look over your file and find a mistake.

During the audit, it is important to be organized and promptly give only the documents that they require, answering briefly but truthfully any questions the agent asks. Also, never give the agent the only copy of any documents and don't exchange casual conversation because it might give the agent more information about you. Lastly, try to ask for any copies of documents that you sign.

An individual's income tax may be difficult to file and will have complicated details that an ordinary person may have trouble with. An audit is nothing to worry about unless you really have something to hide and the most important thing is to stay calm.

About the Author

Natalie Aranda is a freelance writer.