Every taxpayer’s worst nightmare is to receive a notice from the IRS stating that their tax return has been selected for anaudit. In fact, the word “audit” is enough to make most taxpayers turn white in the face. Unfortunately, there is a substantial amount of misleading information circulating in regards to this issue, and it often causes confusion, poor decision making, and unnecessary stress. Below are five of the most common IRS audit myths:
- Audits occur soon after filing. The IRS is constantly backlogged, and as a result, your tax returns aren’t likely to be audited for at least a year or two after filing. The IRS has up to three years to initiate an audit for most types of tax returns—so don’t get rid of your paperwork!
- Audits always mean that you have to pay more money. Audits can result in a larger tax bill—but they can also do the opposite. If you’ve overpaid, the IRS will issue you a refund.As long as you’ve filed your taxes accurately, you have nothing to worry about!
- Filing late helps you avoid “audit season.” Many people believe that filing late reduces their chances of being audited—but this is 100% false. As discussed above, the IRS takes months if not years to evaluate returns, and the date at which you file isn’t a factor.
- Hiring a professional guarantees that you won’t be audited. There is no way to “guarantee” that you won’t be audited, and anyone who tells you otherwise shouldn’t be trusted. There are many disreputable individuals who have made a living by making false promises to taxpayers. If you choose professional help to file your taxes (which we highly recommend), be sure to choose a licensed, reputable, and well-regarded firm.
- You’ll only be audited if your return raises a “red flag.” While there are variables which can increase the chances of being audited, there is no way to avoid the possibility. This is because the IRS selects a small percentage of returns to audit each year at random—it’s unlikely your return will be selected, but it’s always possible.
The prospect of an IRS audit is scary—but if you’ve filed your taxes accurately and maintained proper documentation, you have nothing to worry about. Contact us today to learn more!