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Mistakes made during the preparation phase of your tax return are the most likely reasons for an audit to begin.
Being audited by the Internal Revenue Service is never a pleasant prospect. Although it’s rare, it can still happen. Doing your due diligence can help avoid this situation. That way, you’ll be able to steer clear of any harsh consequences, such as wage garnishment. However, you might not be able to tell that the IRS means to conduct an audit. Even so, every taxpayer should exercise some constant vigilance as they go about filing and paying their taxes on time. We’ve assembled a list of questions that reflect the typical protocols that unfold whenever this does occur.
What Can Trigger This Investigation?
First and foremost, let’s talk about which conditions initiate the auditing process. Mistakes made during the preparation phase of your tax return are the most likely reasons for an audit to begin. An element of your tax records that could lead to a severe risk of fraudulent activity. Two common examples are using a home office or leveraging the earned income tax credit. Random selections by algorithm could cause you to be screened, and suspiciously duplicate information could land you in hot water as well.
When Will I Be Notified?
Unfortunately, the auditing process isn’t a straightforward endeavor. That said, the IRS strives to deliver notices as quickly as it can. Expect to be notified about reports going back two years. This window isn’t set in stone, though. The scrutiny you face could intensify based on your taxpayer history.
How Can I Tell That Audits are Underway?
The idea of being audited is enough to scare anyone. Even so, the IRS is obligated to notify you via a written notice that you have been shortlisted. You’ll receive this communication by mail, posted to your last known address. Suppose you see threatening emails or get phone calls. In that case, it’s more than likely a predatory scam targeting private citizens or small business owners who aren’t informed enough to be savvy about such underhanded tactics. The Notice of Audit and Examination Scheduled is the official document that tells you that you are under investigation. You will also have a chance to prepare the proof of proper conduct. In other words, you’ll know what materials you need to prove to the IRS that you’re on the up-and-up. Just be sure to meet the deadlines to prevent further pressure from the government.
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