Why You Shouldn’t Panic if You Get an Audit Notification Letter
Getting an audit notification letter from the Internal Revenue Service (IRS) doesn’t necessarily mean that you are in trouble. At best, you’re put at an inconvenience. At any rate, you definitely shouldn’t panic. People have survived IRS audits and so can you!
What’s the Reason?
No matter what the reason is for getting audited, as long as you keep your tax records organized, you shouldn’t have any reason to worry, or take it personal for that manner. Of course, money matters may feel like a personal thing, but it’s important to distinguish the difference between complying to your tax responsibilities and dealing with the consequences when you don’t.
Your Duty as a United States (US) Citizen
As a US citizen, you are obligated by law to pay your taxes. If you don’t, you will have to pay a penalty. What most people don’t always take into consideration is that in addition to paying money, you’ll also have to pay the price of time, which can be just as valuable. The best way to prepare for an audit letter, should you ever get one, is to have all of your tax filings and supporting documents available for the IRS to review.
Doesn’t the IRS Already Have My Tax Information?
The answer is ‘yes’. They have all of your tax information on file, but they need to be able to verify that it’s legit. What they have on file is what you’ve given them. So, the only way that they can verify that it’s all accurate is to compare their records with yours.
When the tax filing season rolls around, all the IRS wants are the forms that report your earnings and expenses. The only supporting documents they generally need are the W2’s, 1099, and any other official IRS documents that summarizes the amount of earnings that were issued to you that tax year.
It is your responsibility to make sure that what you are reporting is true and accurate. This is easy to prove by just keeping a record of all the supporting documents used when filing your annual taxes. For instance, keeping your receipts, invoices, legal identification, and any record that justifies the information in your tax filing needs to be filed away with a copy of the tax forms you submitted to the IRS. A good way to do this is by keeping everything in a filing folder labeled with the tax year or scanning those documents and storing them electronically.
It is recommended to keep at least three years of annual tax filings to be safe. However, you might want to keep 6 -7 years of tax filings if:
- You haven’t reported all of your income, and it’s more than 25% of your gross income.
- You didn’t file a return.
- You filed a fraudulent return.
If none of these things apply to you and you still received an IRS audit letter, don’t worry. Oftentimes, audits are conducted on a random basis. Your name might have been selected in the process. The bottom line is that as long as you have your documents in order, there is no need to panic. If you still feel that you might need a little help, contact the tax professionals at Success Tax Relief at 877-825-1179 today!