Have you received a notice from the IRS about a looming audit? The truth is no one looks forward to tax audits. The good news is that Whyte & Associates, Inc. in Rancho Cucamonga, California, is here to help you navigate. Whether the tax audit is in person or through mail, our team is here to take the panic out of the process.
Preparing for an IRS audit
Before going far, an IRS audit doesn’t mean you’ve done anything wrong. However, you should be prepared to handle the notification for a tax audit. The IRS initiates an audit when it believes you have made an error in your returns, including underreporting income and wrongful claim of deductions. Whatever the case, here is how to prepare for an IRS audit:
- Gather all the records: Have all the supporting documents to substantiate the income, credits, deductions, and exemptions in your tax return. The IRS may also request bank statements, loan statements, contracts, and other documents to help with audit. You must file all your financial records even if you haven’t been tapped for an audit. Mainly, tax audits are carried out in the last 2-3 years, but the review can go back as many as six years if the discrepancies are substantive.
- Research: You may not be a tax connoisseur, but some research will equip you for the audit. Scouring the internet can give you loads of information regarding your rights as a taxpayer, the appeal process, etc.
- Get professional help: If you haven’t hired a tax professional in the past, now is the time to do so. Tax audits can be frustrating and intimidating, but tax consultants have the experience to handle audits.
- Don’t volunteer information not asked. You are expected to co-operate with the auditors, but don’t be over-generous with information. Volunteering information more than asked can trigger further avenues for tax queries.
- Know your options: If you are issued with a tax assessment, you have the right to appeal. This stage requires you to hire a tax or legal consultant to help argue your case for a successful appeal. Although few small businesses go this route, the chances of winning are surprisingly high when you front a well-presented argument.
The best way to handle IRS audits is to ensure you don’t trigger undue attention in your tax returns. However, you still claim credits and deductions you are entitled to. Work with a professional tax consultant to help plan and prepare your taxes to minimize the risk of anxiety-invoking tax audits. For expert tax services in Rancho Cucamonga, CA, please call (909) 575-0080 to talk to Whyte & Associates, Inc.
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