Finding out the IRS plans to audit you may lead to considerable stress and anxiety, but not every audit is as daunting as it sounds. The more you know about what to expect during the process, the better prepared you may be able to be. The more prepared you are, the better your chances of a favorable outcome.
Different types of audits require different responses, so the preparations you must make ahead of one may vary based on the type of audit you must undergo. Try not to panic. Not every audit leads to serious financial trouble. Instead, depending on the type of audit you have, you may never have to actually talk to an IRS representative on the phone or in person. Also, while 90% of those audited wind up having to change something on their tax return, in some cases, those changes may benefit you.
Audits via mail
Most people the IRS audit must participate in audits via mail. These audits, known as “correspondence audits,” involve you producing and submitting additional information or documentation about the entries you made on your tax return. If the documents and receipts you produce satisfy the service, the process may end there.
Audits in the office
If the IRS needs more than you could produce and send via mail, you may need to take part in an in-office audit at a local IRS office. The IRS may ask you to bring along specific documents relating to your tax return. You have the option of having an accountant or attorney join you during the in-office audit.
Audits in the field
Field audits are the most comprehensive of the three types. They often involve IRS representatives visiting you at home, at work or both to conduct thorough investigations about anything they still have questions about. Field audits are most common when the IRS suspects you may have done something unethical, such as lying about income sources.