return audits are one of the biggest concerns of many taxpayers. The best way
to help audit-proof your return is to make sure everything in it is accurate
and in the right place. There are different levels of IRS audits, and the most
common is caused by tax return errors such as reporting income on the wrong
line or form. Taxpayers should also be prepared to provide the IRS with
documentation to support their claims should the IRS audit their return.
IRS might flag your return for review as a result of computerized IRS
screening, random sampling or an income document-matching program that compares
the information in the tax return to information from the taxpayer’s bank,
employer, W-2 and other tax documents. While the issues flagged by the document
program are obvious triggers, there are other, more complex ways of choosing
returns for audit.
should be aware of the following red flags:
unusually large amounts of deductions when compared with the deductions claimed
on other tax returns with similar income, such as high charitable contributions
or large expenses on rental property
large number of dependent exemptions claimed by a head of household with low
high deductions for casualty losses, home office expenses, and travel and
nontaxable investment income, foreign-source income or business losses
income and no expenses, specifically when claiming the earned income tax credit
What to do if you get “the letter”
audits can be handled quickly and easily when the taxpayer provides some
additional information. The most important thing to do after receiving an audit
notice from the IRS is to acknowledge it and respond promptly. Even if you did
the tax return yourself, you may want to contact a tax professional before
sending information or additional money to the IRS. The IRS does not
necessarily have all the information they need, so you may not owe at all. A
preparer can help determine what to do and locate the information you need to
information on audits and guidance on what to do when being audited is
available in the IRS Audits section of JacksonHewitt.com.
Hewitt tax preparers in offices across the country are available to assist
taxpayers with audit questions or concerns, even if Jackson Hewitt did not
prepare the return in question.