Monday, March 23, 2015

The Right Way to Prepare for a Tax Audit

An IRS audit is initiated if you are presumed to have filed an in accurate tax return. After all, the IRS won’t be spending precious time and money to come after you if they believe you are clean.
So how do you combat that assumption of guilt even before you’re audited? The answer is to be credible. As you may well know, credibility comes with what you do, not what you say, and in the world of IRS audits, credibility is all about being organized.
You don’t want to blindly sift through your box of receipts, and neither does your auditor. Unfortunately, someone has to do it, and better you than the auditor. Take the time to organize your receipts so the auditor doesn’t have to.
If you can, categorize your receipts accordingly. Create a separate folder for your home expenses, another one for subcontractor repairs, and another one for your contributions to nonprofit organizations.
If possible, mark your receipts to explain further the expense it refers to. For example, if you entertained a client for business, mark the name of the client, and explain why.
An IRS audit is all about making a good impression on your auditor. If your efforts fail to impress, be sure to contact an IRS tax lawyer immediately.

No comments:

Post a Comment