Three Common Myths about Individual IRS Audits
Ever had that dream were you get a letter in the mail from the IRS, informing you that you’ve been chosen for an audit? Nobody likes the idea of that dream becoming a reality, and in most cases, we pinch ourselves and wake up. But what if you did get audited by the IRS? Would you be ready? Would they find fault with your tax situation and slap you with penalties? Would you be stuffed in a room with intimidating agents?
There are quite a few myths about IRS audits. Here are three of the most common:
1. It’s highly probable that you’ll be audited
When it comes to being audited, the odds are in your favor. In fact, your chances of being picked for a tax audit are generally less than 1%. And if you make what’s considered a “normal” salary or earnings, the chances are even lower than that. This doesn’t mean you should ‘take it easy’ on your taxes and adopt the attitude of ‘don’t sweat the small stuff.’ If an audit should happen, not having your ducks in a row can have a financial impact. But again — the odds are in your favor when it comes to getting chosen for an audit.
2. I’ll have to meet with an agent face-to-face
Not necessarily. This may have been more common in the past, but the fact is, the IRS is busier than ever. When you look at the statistics, you see that around two-thirds of all audits never result in a face-to-face meeting, and are carried out entirely by mail.
3. Audits always result in more payments to the IRS
Nobody likes the idea of being audited, being found to owe a lot more tax than you anticipated, and having to pay penalty fees on top of everything else. But the audit process sometimes yields favorable results for taxpayers. Tens of thousands of audits result in refunds every single year. Being audited by the IRS and receiving hundreds or thousands in your pocked as a result — now that’s a nice thought! And it’s good reason to do things right, and to utilize the services of a professional.
Getting the help you need
Seeking professional tax help is a good way to lighten the burden if you feel a little overwhelmed at tax time. As long as you disclose everything to your tax professional, you should expect the most advantageous result possible in your particular case. That’s assuming, of course, that your tax professional is hightly trained and reputable. It’s also assuming that your communication is good, and that your tax professional really understands your tax situation. For that, you really need someone you can trust.
There may be a lot of myths about IRS audits, but the fact is, they do happen every year, to people of all income brackets. And many of them do result in money owed to the IRS. This is yet another important reason to understand tax code and how it relates to your situation — or find someone who does.