The Facts About Getting Audited

Facts About Getting Audited

Filing your taxes can be challenging enough for the average American taxpayer. But throw in the possibility that the Internal Revenue Service (IRS) could come back at you with a tax audit after a few months.  Here are a few facts about the process that could help you understand your risk.

A Compliance Contact Isn’t Always an Audit

When a taxpayer is contacted by the IRS, the next step isn’t necessarily a full-on audit of that person’s records. The agency’s computer system might have flagged the return for issues that can be resolved without an in-depth examination.

Different Types of Audits

The IRS can conduct a taxpayer’s entire audit by mail, or it may require an in-person interview. Face-to-face audits are generally more complicated or wider in scope, and they might be held at an IRS location or a taxpayer’s home, business, or accountant’s office.

Some Groups Face Higher Audit Rates than Others

According to IRS data , taxpayers who earn less than $25,000 annually, or more than $500,000, are more likely to be audited than other Americans. For poorer taxpayers, that’s because the IRS automatically checks for mistakes or fraud related to the Earned Income Tax Credit (EITC).

Good Record Keeping May Offer Protection

One way taxpayers can help make their interactions with the IRS go a bit smoother is to keep meticulous records. Careful records can help make tax preparation more straightforward with less guesswork and more facts.

Ignoring the IRS Could Be Costly

Take a deep breath and don’t panic or toss any correspondence you might receive from the IRS.In a recent survey sponsored by the Jackson Hewitt Tax Debt Resolution Service, 22% of respondents said they had ignored a letter or notice from the IRS or state tax authority.

The Takeaway

No one can guarantee a return won’t be audited by the IRS—even if you aren’t doing any of the things most experts say might put you at higher risk. But if you’re honest about your income and your deductions, keep organized and complete records, take care to enter all information accurately—and double check your work.

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