No one wants to be audited by the IRS. It is embarrassing and also draining emotionally. It makes many people uncomfortable because it implies that you did something wrong. But just because you are audited doesn’t mean that you did something wrong. The IRS randomly picks who it audits. Some individuals are more likely to be audited than others. For example, self employed, high income filers, and workers with cash income are more likely to be audited.
So what can you do to avoid an audit or protect yourself if selected for an audit?
- Be honest when completing your return: Don’t lie about how much money you made.
- Keep all receipts: IRS Publication 552, Recordkeeping for Individuals is a good source on the length of time to keep records.
- File your return on time: Be mindful of the due date for filing and file on time and as soon as possible.
- Know your rights as a taxpayer: IRS Publication 1, Your Rights as a Taxpayer is a good reference for all taxpayers to read.
In summary, be smart, know your rights, keep proper records and you will be well prepared in the event of an audit.
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