What Happens during an IRS Audit?

(5 of 8)

What Happens during an IRS Audit?

You won’t get grilled under a dangling light bulb in a dark room. The process is surprisingly normal and human. An audit is simply an examination of a tax return to verify that the tax reported is correct. It doesn’t mean you are automatically guilty of tax fraud. The IRS follows procedures to ensure that your rights as a taxpayer are respected.

Types of audits

There are several types of audits. One is a correspondence audit, which takes place by mail. You receive a letter asking for clarification of something on your return. There are also office audits, in which you visit an IRS office. Field audits are another type of audit—they take place at your home, your job, or your accountant’s office.

At these audits, you will be asked about certain items on your tax return that need clarification. You may need to substantiate them with evidence, such as mileage logs, receipts, canceled checks, and other information.

Avoiding an audit

You can reduce your chances of being selected for an audit by removing any cause for suspicion about your income and your various deductions and credits. This means you should be able to defend any deductions and credits as well as your sources of income. One thing that can help is to attach documentation for large deductions when you fill out your tax return. Adding supporting documents for things like the home office deduction or a big medical deduction can prevent the need to audit you in the first place.

Another thing: keep supporting documents and records for three years. The audit window is three years. Keep your records handy.