-
Step 1
Hire a tax attorney as soon as you receive a letter informing you of an audit. Tax professionals suggest never speaking or having any direct contact with an IRS auditor. IRS auditors have training in getting as much information as possible from people (more information than necessary, in some instances).
-
Step 2
Provide all pertinent information to your attorney or representative. This includes any documentation, such as receipts, previous tax returns, copies of checks or any diary notations you may have. The three areas the IRS audits the most are auto mileage, travel and meals and entertainment. Expenses over $75 require a receipt. For expenses under $75, a diary notation is fine, but it must contain the amount, name and location, name of person entertained, business relationship and business discussion.
-
Step 3
Prepare for the audit. If you decide to meet with the auditor yourself, you may still seek the advice of a professional. Ask for guidance on how to prepare for the audit. Make sure you have all necessary documentation.
-
Step 4
Substantiate all expenses when you file. This is the best thing you can do to avoid problems in the future if have to go through an audit. If you claim any deductions, make sure you have receipts, copies of checks and any other documentation to support your claim. Remember that the IRS can conduct an audit 3 years after a tax return is filed, so keep your returns for at least 3 years.
-
Step 5
Check your arithmetic. Take the time to check all your calculations and amounts before filing your return. Keying in one zero or leaving it out can make a big difference. Taking these precautions, you can minimize the possibilities of owing taxes after an audit.
