Reasons for a Tax Audit

There are numerous reasons why the IRS may decide to do a tax audit on your return. Most of these are just to check out that the information you provided is correct. In other cases, they may feel that the information you provided was not correct and you are leaving out information that could change your tax bill with them.

While most tax audits are not going to be that big of a deal and will just require sending in some information, it is still important to take these seriously. If you are facing a tax audit, don’t go and do it on your own. Rather, choose to go with a tax professional who will be able to help you out during this whole process. This can make the process easier and you can ask any questions that you would like to get rid of your anxiety. Get through the auditing process in no time with the right team on your side.

Big Variances in  Income

One of the biggest indicators to the IRS that there is some issue with your tax return is that there is some big difference in your income or filing status from one year to another. If you made $50,000 a year as a self-employed individual and now you are down to $10,000 for the year, this is going to make the IRS take notice. If you did only make that much money because of a disability or partial retirement, you are not in trouble, but you do need to prove that there is no extra money that is hiding somewhere.

Many people make the mistake of trying to hide some money after a tax return year that didn’t give them the best tax bill possible. The IRS is going to be looking for this kind of thing, so it is never a good idea to try and attempt it. Always keep good records of your income so you are able to prove how much you made, even if it goes down, when the IRS asks.

More Than One Return

If someone is using your information to send in another return, you may have an issue on your hand. The IRS is going to notice when they receive more than one return on the same social security number. Once this happens, they are going to send out a letter to you, asking you to verify your identity and to prove who you are. This may be like an auditing process in that they will ask for personal information and perhaps some proof of income in the process. You will be able to fill this out online or call the IRS in order to submit the information. This process is usually pretty simple as long as you get it done as quickly as possible

Other Red Flags

There may at times be other red flags that could set off an audit on your account. The IRS is always looking for red flags to determine if you are telling the truth on your tax return or if someone is trying to use your information. If you have a tax return that seems a bit off to the IRS, they will double check it and then ask for you to send some proof of information. Usually the IRS is not going to come all the way out and look at your personal information in person because this is going to cost a lot of money to complete. These kinds of audits will only happen when the IRS feels that a big issue is at hand and wants someone to figure it out in person. For the most part, you will be able to submit your tax papers when asked and do the whole process by mail.

Random Audits

In some cases, the IRS is going to audit you randomly. There may not have been anything that set off a red flag to them, but they may be going through files and doing random audits to see that everyone is doing what they should be. In these cases, all you will need to do is submit the paperwork that is requested and you can usually do these through the mail without any issues. The best thing to do here is to send in the forms as quickly as possible and avoid delays. This ensures that the paperwork goes to the right place and your audit is over as soon as possible.

Any time that you are dealing with the auditing process, you are going to feel a lot of stress and worry. Many people feel that they are going to be in a lot of trouble, although in reality simply sending in the proper paperwork will be the extent of the work that you will need to do. If you are being audited and feel like you need someone on your side to walk you through the process and to get it all done in no time, make sure to contact a tax professional to help you out.

If you are going through an audit, it is important to have someone on your side during the process. The auditing process can seem pretty intense, but when you hire one of our professionals, you will be able to get the audit done and over with and have the best results possible. Contact us today to get started if you are going through an audit.