7 FAQs Will Teach You How To Survive an IRS Audit

red, black and white Danger, Tax Audit warning sign

You go through your day’s mail at your kitchen table. 

Among the usual bills and ads, a letter catches your attention—it’s from the IRS. 

Your heart races and your hands are shaking as you open it.

The letter says your tax return is under review. In an instant, you find yourself digging through old tax records. For days, you struggle to sleep and eat, always thinking about what might happen next.

You’re not alone.

Each year, thousands of taxpayers face audits. The IRS conducted over 700,000 audits in 2022. And more might be on the way.

With funding from President Biden, the agency plans to hire 20,000 more agents. Its goal is to improve its customer service and enforcement activities. While it focuses on auditing high-income earners, those in lower-income brackets should still be careful. Anyone can be subject to an audit. 

Facing an audit can be scary, but it doesn’t always spell trouble. The IRS wants to ensure the accuracy of the information on your tax return. That’s why Peace of Mind Tax Help always tells taxpayers to maintain good records and report honestly. Here are answers to common questions about tax audits to help you survive a dreaded encounter with the IRS.

 1. I’ve never faced an audit in over a decade of filing taxes. What are the chances of the IRS auditing me in the future?

Taxpayers have less than a 1 percent chance of facing an IRS audit. But you have a higher risk if you’re self-employed or earn a higher income. The IRS also considers certain factors as red flags, which can increase your chance of an audit. These include claiming excessive deductions,  underreporting your income, and holding cryptocurrencies. 

2. I got audited before. Could the IRS audit me again?

Yes, the IRS can audit you more than once, but not for the same year. This could happen if you make the same mistake as in your past filing. Also, if you involve yourself in things the IRS sees as suspicious, like the examples above. 

3. I received a letter from the IRS. What should I do?

Open the letter as soon as possible. If it’s an audit, the letter will state that they will examine your tax return for a specific tax year. It would also mention the reason for the audit, the information they need from you, and your next steps. If you’re not sure how to proceed, your safest bet is to contact a tax professional for help. 

Be aware that the IRS doesn’t notify taxpayers of an audit through email. You shouldn’t respond or click any links or attachments from these emails, because they’re probably a phishing scam. If you’re in doubt about any communication from the IRS, check here first.

4. What should I expect during the audit?

The IRS may conduct the audit by mail, phone, or in person, depending on the instructions in your letter. The IRS auditor who reviews your tax return will examine your income, deductions, credits, and documents. The auditor will also ask questions to make sure that what you say matches what’s on record.

5. Should I handle the audit myself or consider hiring a tax professional?

You can represent yourself before the IRS. If your taxes are simple and you understand tax laws well, you might manage the audit alone. But you also have the option to hire a professional to represent you. Because the audit process is complex, we generally recommend seeking professional help. You can hire a tax attorney, CPA, or enrolled agent to handle your case.

6. What will happen next after the audit?

You will receive a report outlining the auditor’s findings. If you can support the information under review, the IRS won’t make any changes. They’ll accept your return as filed. If you owe more taxes, the report will detail the proposed changes to your tax return. You can agree with the findings and pay the taxes. If you disagree, you can file an appeal.

7. I agree with the decision but can’t afford to pay the taxes. What do I do? 

The IRS understands that sometimes people can’t afford to pay their taxes all at once. They have different options for taxpayers struggling to pay a debt. They offer a payment plan, where you can pay in smaller amounts over time. You may also qualify for an offer-in-compromise or currently-not-collectible status. 

If you’re unsure what to do, it’s best to ask tax professionals for help. They can help you find the best payment option and negotiate a lower fee for you.

Don’t Fear An IRS Audit

Facing an audit may sound like a frightening experience. But you shouldn’t worry. As long as you’re honest with your filing and keep accurate records, you’ll survive.

If you need help with audit representation or setting up a payment plan, Peace of Mind Tax Help offers a free 15-minute, no-obligation consultation. Call us at 775-305-1040 for a consultation with our tax experts.

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