Nobody likes getting audited. If you’re one of those people who receive a letter from the IRS, remain calm. The audit is a procedure that may be resolved with nothing more than the correct paperwork. Fortunately, it can be handled quickly and with little stress, thanks to planning and knowledge of what to expect.
To help you worry less about their memo, here’s a list of reasons the IRS may contact you for an audit:
1. Number Errors
The IRS will audit your return if you write an incorrect number or fail to include a number. There’s a lot that could go wrong here. For example, you may accidentally omit a number from your expenses that you’re now forced to include. You may have even used a wrong number for your deduction. That would mean you have to pay back what you owe. If you’re dealing with numbers, double-check them to avoid these problems.
2. Unusually High Tax Deductions
If your tax deductions exceed the national average, you may be selected for a review. You are more likely to face an audit when you claim unusual deductions, especially those on an item that most people don’t typically claim. If your profession is one that typically has high deductions, you may have to save those receipts and other documentation just in case the IRS asks for them.
3. Underreported Income
The IRS will audit you if you don’t report income or if the amount is incorrect on your return. This can be a tough situation because it covers a broad range of issues. For example, your employer may have misreported your income, or you may have had it but failed to report it on your return. The IRS will compare your income to your Social Security earnings statement. If you didn’t report that income, you’d have to pay back what you owe.
4. Overreported Dependents
If you claim far too many dependents on your return, you may be selected for an audit. You may have accidentally listed a dependent, or you may have intentionally filed for someone you don’t have. You may have claimed an adult child or a parent as a dependent. Overreported dependents may lead to a tax penalty.
5. Suspiciously Neat Numbers
If your numbers are too neat, you may be selected for an audit. This means every number ends in a zero, making them all divisible by ten or a hundred. This makes your numbers look like estimations. When this happens, the IRS may check and see if you made any mistakes. The IRS will also check to see if you’re actually eligible for the deduction you claimed.
As you can see, the IRS audit isn’t something to be afraid of. However, you should still avoid the problems cited above and take the necessary steps to be prepared. If you are selected for an audit, you will receive an official IRS letter asking you to meet with an auditor. Be prepared with your documentation so you can avoid any problems and so you can help make the auditing process as smooth as possible.
Avoid the tax stress and worries by employing our tax resolution services in Birmingham, AL. We’ll help you prepare everything you need, and together, we’ll find permanent solutions to your tax problems. Contact us today!