#IRSaudit #taxaudit #taxtips #financialplanning #taxpayers #taxseason
Surviving an IRS audit – The Ultimate Guide 😱
So, you’ve received that dreaded audit letter from the IRS. You’re panicking, stressed out, and wondering how on earth you’re going to get through this unscathed. You’re not alone – many people have been in your shoes. But fear not, because I’m here to guide you through the process and help you come out on the other side with no changes to your tax return.
Here’s how I survived an IRS audit and came out unscathed:
Understanding the Audit Letter 📄
The first step is to take a deep breath and carefully read the audit letter. Understand what the IRS is questioning and why they believe there may be an error in your tax return. In my case, it was related to alimony deductions, which I knew for a fact were accurate.
Gathering Documentation 🗂️
Once you understand the issue at hand, start gathering all the necessary documentation to support your tax return. This includes receipts, bank statements, emails, and any other relevant paperwork that can back up your deductions. I made sure to have a detailed record of every transaction related to alimony payments, along with the original divorce agreement.
Crafting a Response ✍️
After meticulously gathering all the evidence, it’s time to craft a detailed response to the IRS. I used the IRS’s secure messaging portal to submit my response and also mailed a physical copy via USPS Certified mail with tracking for added proof of delivery.
Seeking Professional Help 🤝
If you feel overwhelmed or unsure about handling the audit on your own, consider seeking assistance from an Enrolled Agent or tax attorney. They can help you build a strong case and ensure that you have all the necessary documentation to support your position.
The Power of Fastidious Bookkeeping 💼
In my case, fastidious bookkeeping saved the day. Having a clear record of all transactions and paperwork related to my alimony payments made it much easier to respond to the IRS with confidence. Keeping thorough records is crucial in the event of an audit and can make all the difference in proving the accuracy of your tax return.
Final Thoughts 🤔
If you find yourself in the midst of an IRS audit, remember to stay calm, gather all the necessary documentation, and craft a detailed response. Whether you choose to handle it on your own or seek professional help, thorough preparation is key to coming out unscathed.
By following these steps and remaining diligent throughout the process, you can overcome the challenges of an IRS audit and ultimately have the audit closed with no changes, just like I did.
Remember, surviving an IRS audit is possible, and with the right approach, you can navigate through it successfully. Don’t let the initial shock and panic overwhelm you – take a deep breath, gather your documents, and respond with confidence. You’ve got this! #taxtips #financialplanning #taxpayers
I am wondering if your ex did not file her alimony. Would be easy for them to check.
IRS has been very sloppy lately. We had someone at IRS fat finger some numbers on our return (that we had to paper file for various reasons), and it took them 18 months to dig up the paper return and correct their typo. Like the form had 1980 for some deductible expenses, but it had been typed in their system as 1080. It took me hours and hours to finally figure out how they arrived at the numbers they did, since they don’t show their calculations at all when they send you a corrected letter.
I’m reminded of a scene in Two and a Half Men where Alan gets audited, and says something like *Why was I being audited? Not because I have unsubstantiated deductions, which I do. Not because I take cash payments from clients and don’t report it, which I do. It’s because no one at the IRS would believe I paid that much alimony. I had to convince them that yes, I am that big of a schmuck!”*
Given the complexity of the tax code, it is nearly impossible for you to not have done anything incorrectly. The IRS seems to recognize this for the time being and only goes after egregious offenders. Really glad it worked out for you – you sound like you are as meticulous as reasonably possible to comply with the code.
I had a state audit. I just organized everything, wrote everything up, referenced the guidance in various publications, and – amazingly – had a person assigned to my case that would respond to phone calls. Whole thing was wrapped up in under a week, probably 10-15 hours of my time total. Was one of the most painless and straightforward government experiences I ever had.
I had a similar issue…lump sum alimony and reoccurring alimony.
My lawyer worded the divorce agreement so that the lump sum would be tax deductible…her lawyer changed the wording slightly and did not flag that it was changed (dubious…I know).
Got audited for lump sum and reoccurring alimony:
* I had to pay taxes on lump sum (still upset about this one), because the wording classified as a non-deductible expense…but the IRS waved late fees and penalties due to the situation
* The reoccurring alimony…once they discovered that I had filed correctly (I paid this much alimony $$ to this social security number) and had bank records to prove it), they went after my ex as she did not file her taxes that she had received alimony
* Boy – was that a fun phone call from my ex asking me if I “would consider refiling past few years income taxes”…um…let me think about that…NOOOOO
The IRS was very nice and friendly to work with from this one (and hopefully only) experience.
Unrelated but that’s a phenomenal username. Also super helpful info. Thanks.
I’m self employed. I was audited over 2 years awhile back. They found about $2k in expenses for one year that I couldn’t claim. This was more down to simple mistakes than fraud. The second year they told me there was a tax break I was eligible for that I hadn’t taken so after they applied that and removed some penalties they applied earlier, I actually ended up making money. Granted there was some back and forth and it took a few months to get the final result but when all was said and done I ended up making money on the audit lol. It wasn’t a bad experience. The auditor was professional and friendly. Just be open and honest with them and you should be okay.
I had an issue years back with some filings. I got the letter; it worried me. In the end, everybody I dealt with was fair, helpful, and reasonable. One person was assigned to my case. It changed my whole attitude towards them. As someone else mentioned, they are so slow, that they get in their own way. It also taught me to keep impeccable records!
I once got in trouble with the IRS
I was pretty happy with how they worked with me.
As an auditor for the IRS, it’s interesting to see the range of experiences that people have, as well as some of the other comments saying that the person they dealt with was, if not pleasant, reasonable and professional.
We don’t select the cases we’re given. We’re not there to turn your life upside down. We’re there to make sure things were done correctly. And yes, sometimes we have to dig deeper to make sure. But we make sure we do it in a courteous way. I was taught to put myself in the shoes of those under exam and how we’d want to be dealt with.
I’ll end this by saying the same thing I tell those I’ve examined…keep fastidious records. One of the easiest adjustments we can make is when we ask for documentation for an expense and you can’t/won’t give it to us. We invoke IRC 6001 and that expense goes away. Also, respond and talk to us. It makes things go smoother and we like smooth exams just as much as you do.
So glad we have those extra 84,000 agents to go after the ultra rich…