Perhaps you’ve been audited by the Internal Revenue Service (IRS) previously. If not, you may have heard about someone who has. In either case, you’ll no doubt know that it is never a pleasant experience. It’s best to avoid a federal tax audit altogether.
If you are concerned about being audited, it’s best to utilize a professional tax service. Look into tax services Santa Ana CA.
What is a Tax Audit
A tax audit is an official review and examination of the tax returns that you have filed. Audits are initiated and carried out by the IRS when they have questions about your return, especially if it appears to them that your taxes have been prepared in error. They are especially concerned about taxpayers that under-report the amount that is owed.
Common Issues That Invite and Audit
A whole host of issues can crop up that will make any given return more likely to be audited than the average filing. These include:
- Math errors on the forms
- Incorrect usage of forms and schedules
- Under-reporting income
- Taking a home-office deduction, even if legal and correct
- Not reporting investment income
- Not reporting cryptocurrency trades
Generally, the IRS can audit returns filed within the last three years. If substantial errors are suspected, the IRS can go back even further in time.
In all cases, strive to keep good records, and be honest about your financial situation when preparing and filing your taxes.
Why You Don’t Want to Contend With the IRS
The IRS can make your life miserable. They have a powerful team of auditors and once they latch onto your return, it is likely to be a long and drawn-out process, even if you end up being right. It’s best to work with a professional who will prepare your tases properly, help you pay the minimum amount you legally owe and support you fully if an audit should come up.