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Surviving an IRS Audit: Your 5-Point Guide

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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.

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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.

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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