Audits happen. There are some simple steps you can follow to help you avoid being audited. But if you do receive notification about an audit, resolution is easier by following the same steps that can help you avoid them.
1. Keep all documentation.
Simply put, save receipts or bank statements that back up your expenses. If you are audited, the IRS will potentially ask for not only bank/credit card statements, but more specifically receipts of purchases and potentially pictures of the items in use or in your possession.
2. Log expenses right away.
Don’t fall into the trap of creating an expense record at the end of the year. Instead, log your expenses on a weekly or daily basis. Keep a detailed spreadsheet of the amount spent, the purpose of the spending, and when and where you did the spending. Honest Tax Solutions provides Bookkeeping Services to make your life easier when filing your annual tax returns.
3. File an electronic return.
Paper returns are audited more frequently than electronic returns because of the processing system. With paper returns, the return physically passes through the hands of IRS agents. An electronic return simply goes through a software algorithm. With IRS Agents involved, there is more opportunity for questions to arise whether that’s with your tax information or otherwise.
4. Contact your tax professionals to respond promptly to the IRS.
If an audit does result in additional tax or documentation needed for the IRS, let Honest Tax Solutions know as soon as possible. The sooner we know, the sooner that situation can be dealt with and negotiated. By being prompt, you are able to lower the interest and potential penalties.
Honest Tax Solutions is well-versed and more than capable of handling your IRS or State audit. With proper client collaboration and backing, Honest Tax Solutions will walk you through every step of the way and represent you in the audit, making it as easy and as stress-free as possible.
Contact the HTS Team today to schedule time to review best strategies for your taxes.