Keep organized tax records in the event of an audit
9/28/2010
Receiving a tax
audit notification from the government can instill fear in even the most financially responsible Americans. The government increased its tax budget this year, giving it more resources to seek out tax evaders. But consumers who are facing an
audit can make the process go by more quickly and painlessly by gathering their tax and financial documents and knowing their rights.
First of all, receiving an
audit notification does not mean that the consumer has done anything wrong. Tiny factors or errors can raise red flags that may result in an
audit. For example, self-employed workers who claim home office deductions may be audited and asked to show that the space is used solely for work. Making large charitable contributions may also peak the interest of the government and urge them to make sure the write-offs are legitimate, according to financial Web site Go Banking Rates. And most commonly, tax mistakes, such as transposed numbers and significant income disparities, can result in an
audit.
Consumers who receive an
audit notification should start by getting all of their tax records together. Detailed recordkeeping can make the
audit process go by more easily - and also benefit consumers during filing season. Taxpayers should retain all documents pertaining to investment gains/losses, income, education credits/deductions, retirement paperwork, mortgage or real estate information and supporting documents for charitable contributions (photos, appraisals, receipts).
Depending on the type of
audit that will be conducted, consumers may want to consider seeking representation. Most audits are conducted via mail, in which the government requests information and supporting documents from the taxpayer. In more serious cases, the government may request an in-person
audit. In these circumstances, consumers may want to consult with their
tax preparer, tax attorney or accountant and ask that they be present at the meeting. During the meeting, taxpayers can choose to have their representative deal directly with the government official. Individuals should not volunteer information that is not specifically requested by the auditor.
If the auditor determines that an individual owes taxes or penalties, consumers should speak with their tax preparer who can provide insight on payment options and alternatives. Keeping an individual's tax preparer in the loop can help consumers understand the reasons they are being audited and how to handle the meeting.
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Liberty
Tax Service provides computerized
income tax preparation and electronic filing. Each
tax office offers customers
audit assistance, a money back guarantee, and free tax return checking.