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7 Key Items About IRS Audits

By
Education & Training with Number Cruncher LLC

An IRS audit is an examination of a taxpayer's financial records and tax returns by the Internal Revenue Service (IRS) to determine if the amount of taxes reported and paid is accurate. Some key things to know about IRS audits:

  • Selection Process - Tax returns are selected for audit either randomly or due to something triggering further review, like a discrepancy between income reported and income shown on W-2s. Only a small percentage of returns are audited each year.
  • Notification - If you are being audited, the IRS will contact you by mail first. The notice will explain what items they want to review and what documentation you should provide.
  • Types - There are three main types of IRS audits: correspondence audits done by mail, office audits done in-person at an IRS office, and field audits done at your home or place of business. Field audits are the most comprehensive.
  • Scope - The audit may cover just one part of your return or multiple items depending on what is being reviewed. The IRS will spell out what they want to examine.
  • Documentation - Having thorough documentation is key. The IRS may request receipts, invoices, bank and investment statements, and other proof to back up credits, deductions, income, etc.
  • Results - If no issues are found, you will receive a closure letter from the IRS. If discrepancies are found, you may get a bill for additional tax owed, interest, and possibly penalties. You can choose to appeal audit findings.
  • Representation - You have the right to professional representation by a tax attorney, CPA or enrolled agent during the audit process. They can help guide you through the audit.

Audits can feel stressful, but being prepared with documentation can help the process go smoothly. Contact me if you need help with an IRS audit or other IRS problem. Contact me at candy@numbercruncherllc.tax or 702-469-9426.

Dennis Neal
RE/MAX, Big Bear - Big Bear Lake, CA
Your Home Sold in 21 Days or We Sell It For Free

Thank you for this helpful post.

Nov 10, 2023 11:53 AM
Lise Howe
Keller Williams Capital Properties - Washington, DC
Assoc. Broker in DC, MD, VA and attorney in DC

Don't forget - when you get that letter - don't panic  (or maybe just panic and abandon all hope!) 

Nov 10, 2023 04:33 PM
Richard Weeks
Dallas, TX
REALTOR®, Broker
Great information, thanks for sharing.  I hope you have a great day.
Nov 13, 2023 03:10 AM
CANDACE (Candy) STEVENS, EA
Number Cruncher LLC - Overton, NV
Helping Taxpayers Resolve IRS problems

Lise Howe You are correct.

Most importantly OPEN THE LETTER!  

Have a great day!

Nov 29, 2023 09:04 AM
CANDACE (Candy) STEVENS, EA
Number Cruncher LLC - Overton, NV
Helping Taxpayers Resolve IRS problems

Dennis Neal You're Welcome.

Have a great day!

Nov 29, 2023 09:04 AM
CANDACE (Candy) STEVENS, EA
Number Cruncher LLC - Overton, NV
Helping Taxpayers Resolve IRS problems

Richard Weeks have a grand day!

Nov 29, 2023 09:05 AM