Just the words "IRS audit" are enough to make most people roll their eyes or groan in pure agony. More specifically, business owners in particular often fear being audited by the IRS. That said, there are numerous steps people can take when they are eager to mitigate the risks of being audited.
So, you just found out your business is getting audited. Don't panic! You can get through it. The first thing to check is whether it's a real audit. The IRS emphasizes that it always initiates audits by mail. If you get a phone call or an email, it's a fraud.
While it is accurate to say that the IRS has audited significantly fewer people, less than 1% of individual tax returns are audited and the majority of audits nowadays are handled from a distance rather than in person, these changes do not mean that you will never be selected by the IRS for an in-person audit of your tax forms.
Are you worried about the likelihood of your business being audited by the IRS? If so, there are a lot of preventive red flags that you can keep an eye out for when looking to protect your business from being the focus of an audit.
All investors seek to take advantage of all legal means to legitimately reduce their overall tax liability, but abusive tax shelters are illegal investments claiming to reduce your income tax liability without changing the value of your income or assets.
While you cannot fully control whether the IRS audits you come tax season, there are measures you can take in an effort to lower your chances of being audited. It all starts with hiring a reputable tax accountant. If you prefer to file your own taxes, make sure you are diligent and extra careful. But what does this mean? Basically, you should avoid making the following common mistakes that tend to result in an audit from the IRS.
An IRS audit reviews and examines an organization's or individual's accounts and financial information to ensure it's reported correctly according to tax laws and to verify the reported amount of tax is correct.
You may be surprised to learn that not every audit notification you receive will be legitimate. So, first, make sure you received an official audit notification. The Internal Revenue Service (IRS) will notify you either by letter or by a phone call followed by a letter. The IRS does notnotify taxpayers about audits through email, so if you do get an email saying you've been selected for an audit, it's probably fraudulent. If you've determined that you're definitely getting audited, your next step is to learn what's involved.
The IRS will assure you that you've been randomly selected for closer examination. You may feel totally unhinged, like you are entering Dante's Inferno. For one Manhattan man, the letter about the audit was the opening act of a five-month-long drama.
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