Question of the week:I just received a letter from the IRS telling me that my tax return is going to be audited. I was completely honest on my return, but I'm still really nervous. What should I do to make everything turn out right? --Nik B. Dear Nik, I'm afraid you're one of the unlucky few. According to the IRS, only 0.57 percent of income tax returns were audited in 2001 (the most recent year for which stats are available). However, you should look on the upside: Not all audits turn out badly, as evidenced by these stories from members of the Armchair Millionaire community: Smooth sailing. "We've been audited, but no problems. We keep good records (receipts, etc) and had no problem supporting amounts and calculations." --Alan and Kay Coming out ahead. "I was audited a few years ago. All went well for me, but not so the government. I was looking at a $2,782 liability, but when the audit was over the IRS owed me $763." --Ted B. The reason the IRS conducts an audit is to figure out if you accurately reported your income, deductions and/or tax credits. This means that the best defense is to file your return correctly in the first place. And if you're in a group that the IRS just loves to audit--self-employed people are a prime example--keep meticulous records of all of your income and expenses. Even armed with an accurate return and complete records, you'll still need to be ready to face that audit. My guide provides the essentials on minimizing the pain. The Armchair Millionaire Guide to Surviving an Audit
THE BOTTOM LINE: You can and will survive an audit. But knowing what to expect, being fully prepared and having a pro by your side will all help make the experience less stressful. |
you'll still need to be ready to face that audit. My guide provides the essentials on minimizing the pain.
Posted by: Coach Bags | June 13, 2011 at 08:27 PM