- Days left

Surviving an IRS Audit: Your 5-Point Guide

×
A letter from the IRS is one of the scariest things you'll ever get. If you're unlucky enough to get audited, hiring a tax professional to help you get through the process is your best bet to stay calm and survive relatively unscathed.

But if you can't afford to bring in a pro, here are some tips that will you help you survive your audit.

1. Don't ignore the audit.
The worst thing you can do is pretend like an audit letter never came. Instead, follow the instructions on your letter, with particular attention to replying within the specified time frame. Doing so will help you avoid getting off on the wrong foot.

2. Don't be defensive.
Just because your return gets chosen for an audit doesn't automatically mean you've done anything wrong. The IRS chooses some audits based on a computerized scoring system, which looks for certain elements that commonly lead to tax abuse. In other cases, records from your employer or from financial institutions that pay you interest or dividend income may provide information that's different from what you've listed on your return. Regardless, it pays to keep an optimistic viewpoint, as many taxpayers get through audits without owning a penny -- and sometimes even get extra refunds back.

3. Get the information you need to support disputed items.
Usually, the audit letter will note specific items the IRS is interested in. Gather and organize your records on those items to support your claims, and if you don't have documentation, take steps to get it before your audit date. Without records, the auditor may simply rule against you. Moreover, make copies for the auditor to take so that you can keep your originals.

4. Bring only what you're asked for.
Just like lawyers tell people not to volunteer extra information on the witness stand, be sure to stay on point in your audit. Don't talk about unrelated topics, and don't bring additional information or records to an audit if the IRS didn't request them. That way, you'll be more likely to keep the auditor focused on the specific issues in the audit and avoid a wild goose-chase that could result in extra issues coming up.

5. Being nice can make a big difference.
IRS auditors are used to be treated like dirt, but that doesn't mean they like it. Just as being nice to a police officer can turn an expensive speeding ticket into a warning, staying courteous with your auditor can sometimes mean the difference between winning and losing.

Learn More

For more on the audit process, be sure to check out IRS Publication 556 as well as this simple guide to your rights as a taxpayer.

More from the DailyFinance Tax Center:



Motley Fool contributor Dan Caplinger has dealt successfully with audit requests in the past and hopes he will in the future as well. You can follow him on Twitter @DanCaplinger.

Increase your money and finance knowledge from home

Managing your Portfolio

Keeping your portfolio and financial life fit!

View Course »

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

TurboTax Articles

Video: Who Qualifies for an Affordable Care Act Exemption (Obamacare)?

The Affordable Care Act requires all Americans to have health insurance or pay a tax penalty. But, who qualifies for an Affordable Care Act exemption? Find out more about who qualifies for an exemption from the Affordable Care Act tax penalty, how to claim an exemption on your tax return and how the Affordable Care Act may affect your taxes with this video from TurboTax.

Video: How to Claim the Affordable Care Act Premium Tax Credit (Obamacare)

The Affordable Care Act Premium Tax Credit is a new refundable tax credit that can lower your monthly health insurance premiums. If you qualify for the tax credit, you can claim the Premium Tax Credit throughout the year to lower your monthly health insurance premiums, or claim the credit with your tax return to either lower your overall tax bill or increase your tax refund.

Deducting Summer Camps and Daycare with the Child and Dependent Care Credit

If you paid a daycare center, babysitter, summer camp, or other care provider to care for a qualifying child under age 13 or a disabled dependent of any age, you may qualify for a tax credit of up to up to 35 percent of qualifying expenses of $3,000 for one child or dependent, or up to $6,000 for two or more children or dependents.

What Is Schedule H: Household Employment Taxes

If you hire people to do work around your house on a regular basis, they might be considered household employees. Being an employer comes with some responsibilities for paying and reporting employment taxes, which includes filing a Schedule H with your federal tax return. But even if you have household employees, filing Schedule H is required only if the total wages you pay them is more than certain threshold amounts specified by federal tax law.

Add a Comment

*0 / 3000 Character Maximum

3 Comments

Filter by:
You Sexy Beast!!

We went thru an audit a few years ago. We went in prepared, had all our documents, and were prepared to explain the deductions we had taken that they had questions about. We left the audit with no additional taxes being owed. The guy we spoke with said he was amazed at the people who showed up for audits totally unorganized, with all their receipts in a shoebox. He also said that we were the only ones he had that day (and we were the last appt of the day) who did NOT receive an additional tax bill. He had allotted us a full hour, and we were done in about 20 minutes, and actually just sat and chatted with the guy for a while. It IS a stressful time, don\'t get me wrong. But if you have done your taxes correctly you have nothing to worry about

January 23 2013 at 3:12 PM Report abuse rate up rate down Reply
I LOVE CHANDA

**** the irs

January 22 2013 at 7:20 PM Report abuse rate up rate down Reply
fred daily

One of the best, most concise audit advice articles I've ever read. I might add that the IRS auditor has nothing to do with selecting you for an audit. He's only doing his job, and as the article suggests, he's human and being nice to him can go a long way to keeping the audit result as painless as possible.

Fred Daily, author "Stand Up to the IRS."

January 22 2013 at 11:38 AM Report abuse rate up rate down Reply