Tax audits should not be feared.

There are tons of misconceptions about audits. But, tax audits don’t need to be scary.

Even if you’re a small business owner or do-it-yourselfer; most concerns are unfounded. That’s why we’ve busted 5 myths about them below.

1. Late or Amended Filings Will Mean an Audit

Even if you file for an extension, it really won’t make a difference to the IRS. The IRS will mostly be in search of irregularities and abnormalities in your claims. Therefore, it’s better to take the extra time to make sure you prepare an accurate tax return as opposed to a ‘late’ one.

Even if you need to file an amendment, this does not necessarily mean that an audit will be triggered. This simply means that the IRS will be reviewing the document twice but in the exact same way.

All you need to do is provide a reason why you request the amendment and it will most likely be returned without issue.

2. An Audit Will Happen in Person

Most people are terrified of being contacted and having to meet with the IRS. But, meetings with the IRS almost never happen. In fact, the IRS typically handles all of its correspondence by mail.

Because it’s by mail, this process is also not immediate. Mail tends to take time which can stretch on for months.

If the IRS does need to schedule a face-to-face meeting they will be contacting you to personally schedule an appointment and you will be well aware ahead of time.

3. Calls Regarding an Audit are a Scam

Although we need to be vigilant, some IRS agents may try to reach you by phone. But, the clear difference is that the IRS will never ask you to give any personal bank information over the phone.

So, if you receive a call from an ‘IRS agent’ and are unsure be sure to follow some simple steps to avoid becoming a victim.

During the phone call do not give up any personal information. Ask the agent for their full name, phone number, and extension. Then, personally call them back using the IRS phone number. Calling the number (at 800-829-1040) and ask a representative to verify the agent’s identity.

4. Deductions and Claims will Trigger an Audit

A major concern we see from clients is regarding deductions and claims. Most believe that the more deductions you claim for things like entertainment, at-home-offices, meals, etc. will increase their chances of being selected for an audit.

However, this is a complete myth. In fact, you should not be worried about the amount you are claiming for a deduction. It is not the number of the deduction that the IRS is concerned about, rather the accuracy of it.

The IRS is also trained to spot inconsistencies that simply don’t make sense. Things like claiming more in donations than earnings as opposed to how much was spent on ‘team meals.

5. Low to Moderate Incomes Don’t Get Audited

We cannot stress enough how it does not matter the amount, rather the accuracy that the IRS is looking for. Therefore, the IRS will not overlook low to moderate-income earners. They will still head through these accounts looking for anything suspicious or incorrect.

So, even if you are in a lower or moderate tax bracket you should ensure that everything you are claiming can be proven and is up-to-date. Otherwise, you will be putting yourself at risk of an audit.

If you’d be interested in learning more, or knowing what services would benefit you, give us a call at 407-328-5001.

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