Have you just received an unexpected personal tax bill as the result of an audit? One of the main themes in the history of the U.S. that has defined our jurisprudence is the concept of innocent until proven guilty. That’s true for tax audits, too.
While violations of tax laws occasionally turn into criminal cases, in the vast majority of instances an audit is a rather straightforward affair. Even so, discretion should be exercised during an audit conducted to examine your deductions. Here are a few tips to keep in mind if you’ve received a notice your personal tax return will be audited.
Don’t be defensive, but don’t be overly ingratiating either. Adopt a business-like demeanor. You do have rights, including the option to decline hosting a personal visit to your home or workplace. Also, you may elect to present evidence supporting your claim in the form of a photo or video.
Of course, this is presuming it’s a run-of-the-mill audit. If there’s any hint you may be the subject of a criminal investigation for tax evasion, you should immediately retain a personal attorney. However, the vast majority of IRS inquiries are usually resolved via mail.
Tempers can run hot when large amounts of money are at stake in an audit, but losing your temper will only aggravate the situation all the more. You likely wouldn’t let loose with a burst of profanity if you got bad news from your doctor (although some might). Take a few slow deep breaths, and remember your rights under the law to dispute any findings in an audit. If you blow your top and rage at the IRS agent, you have only made your case all the weaker. Don’t trigger a potential vendetta by treating the agent poorly. He or she is just doing their job.
Keep quiet unless responding to an inquiry. It’s funny (or maybe not) how many folks will start rattling off justifications for this or that deduction when the agent may not even be looking at that particular issue. Be quiet and respectful. Answer questions politely and succinctly.
The most important tip for surviving a personal audit is to have good recordkeeping. It’s all too easy to lose track of receipts for your deductions, and without proof, the IRS will likely not allow that write-off should you be audited. Consider improving your tax-deduction recordkeeping, which could make going through an audit a much easier process.