How to beat a tax audit

Appeal the audit if you don’t agree : It is your right to appeal an audit examination report. The best way to start is by calling the auditor that you don’t agree with and make your argument. If you are having troubles making your point then you can choose to meet with their manager, appeal with the IRS, or go to tax court.

IRS agents will be poring over returns 1. Double-check your math.

Document your donations. Keep records beyond receipts. Track your bank transfers. Most people are afraid of the IRS , particularly when it comes to being audited. But if you take the right steps, you can beat a tax audit.

A very involved process is ahead of you, one that requires serious preparation. Audits of a related party can also trigger a tax audit.

For example, while auditing the tax return of XYZ Corp. As a result, the agent may. And then prepare some more. Your chances of beating that audit are highest when you have documentary proof of the return(s) in question.

Making the auditor's job easier will win you some points. Organize your records. Your tax attorney may uncover other kinds of errors made by the IRS.

Aside from the basic arithmetic, the auditing agent may have applied the wrong rule, placed some of your income in the wrong category, or neglected certain deductions. The first step of any sales tax audit is being notified by the state that you have been selected for audit. Once this happens, you can start preparing for the audit immediately. Instead of throwing your hands up, this is your first opportunity to take control of the situation.

You need yo have your. Substantiate unusual deductions. Here are ways to avoid a tax audit : 1. Understand the selection process.

Although the process may seem rather random, actually, to flag potential audits, the IRS uses the Discriminate Income Function (DIF), a computer program that compares your deductions with those of others in your income bracket. In my book How To Win Your Tax Audit , I identify numerous ground rules. Use this right to prepare and avoid being caught off guard. Meet with her or her manager to see if you can reach a compromise.

For detailed information about IRS tax audits , see Surviving an IRS Tax Audit , by Frederick W. Therefore, you need to invest the proper efforts internally or with external assistance. While you most likely work with an accounting firm that handles your financial audit or tax compliance, they may not have dedicated professionals who specialize in state and local tax matters. It also gives the IRS time to complete the audit and provides time to process the audit.