If You Received a Letter From the IRS Today, How Ready Are You to Go Through an Audit?
Do you save every receipt from every transaction and document it for proof of a justifiable deduction? Are you the person who keeps a shoebox full of receipts in your closet just in case the IRS decided to audit you?
Well now may be the time to buy yourself a new pair of shoes to get that shoebox, because you are likely going to need it. Audits are coming.
The IRS Plans to Hire 87,000 New Agents
The federal government just gave the green light to the IRS to hire 87,000 new agents this year. While it would be nice if their job was to focus on processing returns quicker, it is likely their main purpose will be to conduct audits and collect unpaid and unreported taxes.
Audits May Increase
Our experts at Tax Time sat down to crunch some numbers and it is within the realm of possibility that with the addition of these new agents, every American household could potentially be audited within the next 10 years. It may no longer be a question of if you get audited, but when.
Who Are They Most Likely to Audit?
A lot of people assume that the IRS will go after large corporations and wealthy individuals for unreported taxable income, but according to the Internal Revenue Service, the group responsible for the largest portion of the tax gap is individuals and small business owners. Although no one can predict exactly who will be audited when, the data points to this group as being a fairly easy target.
Understanding the Tax Code
Knowing and understanding the tax code is important to make sure you are taking deductions correctly and paying your fair share. For example, when it comes to deductions, having receipts and being able to justify those deductions is generally a good thing. But did you know that with donations simply having a receipt may not be enough. For certain donations there are specific words and phrases that must be included in the documentation and without it, an IRS agent can disallow the deduction and make you pay. And once they start finding mistakes an agent can keep digging to find more and start tacking on penalties and late fees.
An Audit Can Be Very Overwhelming
In addition, tracking down and locating everything an agent asks for can be time consuming and result countless hours away from work, family, and leisure activities. The bottom line is even if the IRS doesn’t find missing tax payments, the time spent doing an audit alone can also be devastating.
Tax Time CPAs Are Here for You
The good news is that you don’t have to do an audit alone. The best time to start preparing for an audit is right now. Taking the time to prepare now will relieve a lot of stress and headache in the future. Wouldn’t it be nice to get the notification of a pending audit and have the peace of mind to go into it knowing you have the correct numbers and proper documentation? The best way to do that is to start working with a CPA firm that offers audit assistance and begin building the relationship with a CPA to know that they will have your back during the entire audit process.
Schedule a free call today and let Tax Time CPAs assist with all your tax planning needs.