IRS Audits

IRS audits: no fear for the prepared

Fear of an IRS audits is in most Americans minds. The IRS is the most powerful institution on the planet and at times they are ruthless. The fear comes from all the horror stories people of told in the past. Unlike the police, the IRS agent does not need a warrant to enter your home. They also have the power, if the agent wishes to, remove you from your home at any time they see fit to. There is no court case and not warning at times, just your immediate removal.

These examples are not what usually happen, but they have happened in the past. The best way to handle an audit is to be prepared and know the facts about an audit. The IRS can only audit an individual for the past three years. As a tax payer keep all the forms and receipts for three years minimum. It is best to keep all these items organized and in a safe place. Have all your bank records, including checkbook stubs in one folder. For every bill you pay place them in a folder of their own. The tax deductible donations have to be organized and should clearly define where and when they were paid. Keep copies of every tax forms and returns that you submitted to the government. It’s that simple.

If you had someone do your taxes, have them present at the audit. Most professional places that do taxes offer this service and some even include it with the tax preparation fee.

The best way to keep from being audited is to be honest. If your deductions are unusual, it would be best to keep immaculate records. If the IRS suspects fraud of any kind, the investigation will be thoroughly done and the fine for fraud is 75% penalty just to start so be honest and truthful in your taxes.

Most tax payers are never audited so the odds are that you won’t be, but it is best to be prepared.

Note that while we believe the above information to be correct, we are not tax attorneys. You should consult a tax attorney or a licensed accountant for tax advice. Please be sure to read our disclaimer, available in the sidebar to the right.