The IRS examines every return with the help of their computers and compares their own information and third party information to it. If the IRS finds an error, you will receive a correspondence audit notification. You might think that your IRS Problems are just starting when you receive this notice but you can take care of it if you follow the directions on the notice and do it before the deadline.
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Reasons for Audits
If you're one of the thousands of Americans audited each year by the IRS, you may wonder what the specific reasons are for the audit and what alerted the IRS to audit you in the first place.
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What is the Process of an Audit?
The IRS conducts thousands of audits on tax returns annually. Correspondence, field, and face-to-face are the 3 forms of audits. If you are being audited, it does not mean that you have done anything wrong. What it means is that the IRS has to investigate if your tax return was prepared right.
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A correspondence audit is, obviously, an audit that's done through the mail. These are often done when the IRS computers reviewed your return and found an error. You'll receive a notice telling you that there's a question regarding one or more items on your tax return. You will be asked to validate what you reported on your tax return with more documentation. If the item in question is a mathematical error, you'll either be issued a refund or be asked to pay additional taxes.
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The IRS has given you the head's up that you are going to be audited. That's a bit of a problem. Now your personal financial affairs will be scrutinized. Read the letter before you do anything. It will tell you exactly what the bureau needs. Know the facts, including the year they're auditing, what kind of audit they're doing, and the documents they need from you. Also, remember your deadline to reply, which is typically thirty days.
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