06:54
Faizan
Have you received notice of an impending tax audit? Ease your stress and smooth the process by taking steps to prepare your financial records beforehand.
You thought you had your tax situation under control. You filed your returns, sent in any remaining taxes owed, and breathed a sigh of relief. But then you received a letter from the Internal Revenue Service notifying you that your return is being audited.
Your first instinct might be to panic, but an IRS audit doesn't have to be an overwhelming and frustrating experience. It simply means that the IRS has concerns about some element of your return and wants to locate the error or invalid claim and correct it. You can make the auditor's job and your experience easier by taking steps to prepare yourself and your financial records. Proper preparation can take the audit experience from extremely stressful to a minor inconvenience.
Your first step should always be to respond to the notification by the deadline it gives, and to promptly schedule your audit proceedings. Neglecting to respond can lead the IRS to view you as uncooperative, and that will only make things harder on you. Once you have a date for the tax audit, take the time to:
Assemble the documents requested: If the IRS asks to see supporting documentation for certain deductions or other claims, make sure to have those on hand. In fact, in any IRS audit situation, it's a good idea to gather and organize all of your financial materials for the tax return in question. This includes receipts, bank statements, pay stubs, checks written, and whatever else you can find to support your income, expenses, and taxes owed for the given year.
Request missing documents: Start gathering your financial information soon after scheduling your tax audit, so that you can see what's missing. Then, put in formal requests with your bank, the credit card company, a charity you donated to, your insurance company, or whoever else has the paperwork you need.
Organize your paperwork: The audit will go faster and more smoothly if you have your materials organized into relevant categories. Put investment information into one folder, receipts for tax deductions into another, and bank account holdings into a third. You can even go through and total certain amounts, or input numbers into a spreadsheet for easy at-a-glance viewing.
You thought you had your tax situation under control. You filed your returns, sent in any remaining taxes owed, and breathed a sigh of relief. But then you received a letter from the Internal Revenue Service notifying you that your return is being audited.
Your first instinct might be to panic, but an IRS audit doesn't have to be an overwhelming and frustrating experience. It simply means that the IRS has concerns about some element of your return and wants to locate the error or invalid claim and correct it. You can make the auditor's job and your experience easier by taking steps to prepare yourself and your financial records. Proper preparation can take the audit experience from extremely stressful to a minor inconvenience.
Your first step should always be to respond to the notification by the deadline it gives, and to promptly schedule your audit proceedings. Neglecting to respond can lead the IRS to view you as uncooperative, and that will only make things harder on you. Once you have a date for the tax audit, take the time to:
Assemble the documents requested: If the IRS asks to see supporting documentation for certain deductions or other claims, make sure to have those on hand. In fact, in any IRS audit situation, it's a good idea to gather and organize all of your financial materials for the tax return in question. This includes receipts, bank statements, pay stubs, checks written, and whatever else you can find to support your income, expenses, and taxes owed for the given year.
Request missing documents: Start gathering your financial information soon after scheduling your tax audit, so that you can see what's missing. Then, put in formal requests with your bank, the credit card company, a charity you donated to, your insurance company, or whoever else has the paperwork you need.
Organize your paperwork: The audit will go faster and more smoothly if you have your materials organized into relevant categories. Put investment information into one folder, receipts for tax deductions into another, and bank account holdings into a third. You can even go through and total certain amounts, or input numbers into a spreadsheet for easy at-a-glance viewing.
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