Don’t Panic. The Things To Do As Soon As You Receive An Audit Letter

 

We’ve all had nightmares of being audited. Could it possibly happen to us? What if we somehow made a mistake on our tax returns? Once you submit your return, it can be hard to ignore that nagging feeling that we might have done something wrong.

If you’ve received that dreaded audit letter, do your best to remain calm. It’s not the end of the world—and chances are you’ll walk away unscathed. Oftentimes, audits can be handled without much trouble, as long as you do your best to work out the problem. Here’s what you should do as soon as you receive an audit letter:

Determine why you’re being audited

Take a deep breath. Read the letter and determine exactly what the IRS is looking for. Your return might have been lacking necessary information or they just want to clear up a few questions they had about self-reported items. Once you know, it will be easier to get it all over and done with. Don’t put off starting the process.

Prepare yourself

Understand that this process might take some time, so it helps to be mentally prepared for what might come next. Jot down any questions you might have or what confuses you about the audit in order to ensure you’re clear about everything that’s happening. It’s okay to not have all the answers because sometimes filing returns can be confusing, but take some time to organize your thoughts.

Respond politely

Resist the urge to immediately send an email or letter claiming that the IRS is wrong. They might be, but don’t start off on the wrong foot. And another thing—do not ignore an audit letter! We promise it will only make things worse and will prolong your misery. Be courteous, polite, and respond as quickly as possible.

Gather the necessary documents

Once you know what the IRS wants and why you’re being audited, get the right documents together. Find the documentation that proves your claims and anything else that verifies your returns are valid. If you can’t find the evidence you need, reach out to whoever might be able to send you it. For example, if you’ve made donations, those charities should have the information on record.

Contact a tax professional as soon as possible

If you’re in way over your head or a tax advisor prepared your return, contact them immediately. Tax professionals know a lot about this process and can certainly help your prepare for what’s to come next. Don’t pay what you don’t owe. You should have about 90 days to challenge the audit, so make sure you do the research. Enlist help!

Luckily, there’s a very small chance you’ll ever be audited, but it’s always a good idea to be prepared. Keep your tax information someplace safe and easily accessible. Did we miss anything important? Tweet us!