Many people dread the thought of being audited by the International Revenue Services (IRS). And for good reason. They can be gruelling, time-consuming, and energy-sapping; don’t forget you can end up in the slammer if you are found guilty of any tax fraud. Some people breeze through this audit like a boss while others cringe even at the mention of IRS.
If you find yourself in the hands of IRS auditors; you have no time to feel sorry for yourself. It’s always prudent to have handy tips up your sleeves. For starters, you must know this glowing fact: IRS audits aren’t always intended to contest your deductions but offer an way for you to provide more information to the agency. Schedule C examinations, for instance, require that you account for all items listed on Schedule C – otherwise, they become void.
Don’t Ignore that Letter
Ignoring an IRS audit notice is much akin to digging a grave for your business. The good news is that you have several weeks to get your affairs in order. Even better, getting an extension is a snap. Don’t let it bug you, but note the deadline earmarked on the notice.
Start by collecting copies of all your financial documents. For schedule C audits, gather forms 1040, 4562, and other forms used in filing your returns. Other schedule C audit tips?
- Gather all proof related to the gross income indicated on line 7 of Schedule C. Forms 1099, 1099-MSC, 1099-K, and bank statements are called for.
- Get invoices, sales credit, canceled checks, and other supporting documents as an affidavit for Cost of Goods indicated on line 42 of Schedule C.
- Check line 8 through 27 for any non-Cost of Goods expense you might have indicated. Also, gather necessary supporting documents.
Seek Professional Help
IRS audits aren’t a scare to tax experts. Garner yourself a bespoke, reliable, and experienced CPA or enrolled agent. Make sure that the expert has all the documents and forms at disposal. Don’t shy away from asking any burning question. The expert will not only advise you on the best way forward but also represent you during the audit.
Meet IRS Agents at their Offices
If, at all, you decide to tackle the audit yourself; brace yourself. Meetings should take place in IRS premises, not your office or home. Your communications with the officers should be brief, succinct, and to the point. Be always truthful. Also, furnish yourself with all regulations and rules relating to your case.
IRS audits should not be complicated. The trick lies in your presentation, preparation, and awareness. It’s advisable that you let an expert handle the audit for you.