Tax Audits and Examinations

Ronald Reagan was once quoted "The most terrifying words in the English language are: I'm from the government and I'm here to help." The second most terrifying words are "You're being audited."

So how do you deal with this type of situation and how do you avoid an audit entirely?

While no one can guarantee you will never be audited, there are things you can do to minimize the risk.

File Timely, Complete Returns - Whether you are an individual or business owner, filing all the required tax returns is an important first step to avoid questions being raised. If you have employees payroll tax returns should also be filed and don't forget about 1099's for subcontractors.

Match Income/Expenses Reported to You - If you receive a Form 1099, W-2, 1098, etc. ensure you are reporting those amounts on your return(s). The IRS generally matches the information reported on those types of forms to the information reported on your return(s). Of course, all your income and expenses should be reported accurately. If there are errors reported on any tax forms you received you should contact the issuer and make a note on your tax return(s).

What happens if you are being audited?

The best advice is to hire a professional. Audits can be a stressful event. It is best to have a qualified representative who has dealt with similar issues in the past.

If you are not certain that you are doing all you can to minimize the risk of an audit or want to ensure you are doing the appropriate record keeping, please contact your tax professional or e-mail me at tax@ajbtax.com.