One word when it comes to taxes that can make even the most fiscally responsible people shudder is "audit." It might be extremely intimidating to fear an Internal Revenue Service audit. However, understanding the IRS audit process and its duration can help alleviate some of that anxiety.In this blog, we will answer the question of how long can IRS audit your tax return and what you can do to prepare for one.
Types of IRS Audits
There are several types of an Internal Revenue Service audit, each with its characteristics and duration. The most common types of IRS audits include:
- Correspondence Audit: This type of audit is conducted entirely through mail. The IRS will request specific documents or information to clarify certain aspects of your tax return. Correspondence audits are generally less time-consuming and can often be resolved within a few months.
- Office Audit: An office audit requires you to meet with an IRS auditor at an IRS office. The auditor will thoroughly examine your tax return and any supporting documentation during this meeting. The length of an office audit can change based on how complicated the problems that need to be looked at are.
- Field Audit: A field audit is the most comprehensive type of audit and typically involves an IRS auditor visiting your home or place of business to examine your records in person. Field audits are often the lengthiest and most involved type of audit.
Typical Duration of IRS Audits
So, how long can IRS audit your tax return? Let's discuss the typical timelines for different types of audits.
Correspondence audits are generally the quickest type of IRS audit. They often take between three to six months to complete. This schedule,however, can shift based on the intricacy of the problems being looked into and the taxpayer's willingness to provide the necessary records.
Office audits typically take longer than correspondence audits. On average, an office audit can last anywhere from six months to ayear. Again, the duration may vary based on the complexity of the audit and the availability of necessary documentation.
Field audits are the most time-consuming type of Internal Revenue Service audit.These audits can stretch over a year or even longer, depending on the complexity of the issues involved and the extent of the IRS auditor's investigation. Field audits can be particularly disruptive to your daily life and business operations due to their extended duration.
What Triggers an IRS Audit?
Understanding what might trigger an IRS audit is essential for taxpayers who want to minimize their risk of being selected for examination. While some audit selections are entirely random, others are triggered by specific factors. Here are some common red flags that may increase your chances of being audited:
- Math Errors: Simple math errors on your tax return can catch the IRS's attention. Double-check your calculations to avoid unnecessary scrutiny.
- Unreported Income: An audit can arise from neglecting to disclose all sources of income, including gig or freelance work. Ensure you report all your earnings accurately.
- Excessive Deductions: Claiming unusually high deductions compared to your income level can raise suspicion. Make sure your deductions are legitimate and supported by proper documentation.
- Inconsistent Information: If the information on your tax return doesn't align with the data the IRS receives from other sources, like employers or financial institutions, it can trigger an audit.
- Engaging in High-Risk Transactions: Certain financial transactions, such as cryptocurrency investments or offshore accounts, can draw the IRS's attention. Ensure you report these transactions accurately.
How to Prepare for an IRS Audit
Keep Impeccable Records
Maintaining thorough and accurate records is critical. Keep copies of all relevant financial documents, including receipts, bank statements, invoices, and tax-related correspondence. Organize these records in a way that makes them easily accessible in case of an audit.
Review Your Tax Return
Before filing your tax return, carefully review it for any errors or discrepancies. Double-check your math, verify that you've reported all sources of income, and ensure that your deductions and credits are accurate.
Seek Professional Assistance
Consider enlisting the help of a qualified tax professional to assist you with your tax return. If the need arises, they can provide insightful advice and assist you in navigating the audit process.
Take Control of Your Tax Destiny
The answer to this question, “How long can IRS audit your tax return?” is that the duration of an IRS audit can vary widely depending on several factors.While correspondence audits tend to be shorter and less invasive, field audits can be lengthy and disruptive. Understanding the triggers for an IRS audit and taking proactive steps to prepare for one can help ease the anxiety associated with the possibility of being audited.
Don't let the fear of an audit overshadow your financia well-being; take charge of your tax return and ensure your peace of mind. Reach out to Tax Resolution Plus now to explore how we can provide the support and solutions you need to resolve your tax concerns. Your financial future is important, and we are here to help you secure it. Contact us today and experience the difference of working with trusted tax experts!