Let’s address some misconceptions and common fears about tax audit. While IRS tax audits can seem daunting, they often do not live up to the exaggerated tales surrounding them. Let’s delve into and dispel prevalent misconceptions about tax audits to reveal the truth behind these processes.
Tax Audit Fear 1. IRS has Superpowers, knowing everything you do.
In truth, the IRS possesses minimal details about an individual, primarily relying on annually submitted forms that disclose income, health insurance standing, and tax-deductible costs such as mortgage interest.
Upon submitting your tax return, the ensuing details are provided to them. The synchronization between the information disclosed to them and your own report typically sparks the initiation of audits.
Tax Audit Fear 2. Certain Tax Deductions are a Trap
Some individuals miss out on important tax deductions, like those related to running a home office, out of fear that claiming them might attract unwanted attention from the IRS.
In recent times, the concept that once held true is evolving – a growing number of taxpayers engage in remote work from the comfort of their homes. Recognizing this shift, the IRS now acknowledges the importance of home office deductions, leading them to create a simplified process to ensure eligible taxpayers benefit from this deduction.
Tax Audit Fear 3. If it is a letter from the IRS, then it is an Audit
It is a common misconception among taxpayers that every communication they receive from the IRS signifies an audit. However, this is only sometimes the case. The IRS may also send a letter for various other reasons, such as informing you of a balance due, changes to your refund, verification of your identity, corrections made to your return, processing delays, or queries regarding your tax return.
Tax Audit Fear 4. I will get locked up if I report something wrong.
It is a rare occurrence for individuals to end up in prison without having engaged in significant fraudulent activities. Usually, when errors are made, taxpayers can expect to have their tax returns adjusted, leading to a required payment, fines, and penalties.
Tax Audit Fear 5. An audit will always cost you money.
Prepare to be surprised, for each year; numerous taxpayers emerge from an audit to discover the government owes them. Furthermore, a significant number of audits conclude with the IRS confirming that all is in order, resulting in no alterations to the tax amounts.
Can I Disagree and Appeal to an IRS Audit?
In the event that you find yourself in disagreement with the outcome of an IRS audit, a 30-day window is usually provided for you to file an appeal. The avenue for appealing lies with the IRS Office of Appeals. Commencement of this 30-day appeal period is triggered by the correspondence outlining the proposed changes to your tax return if your audit was conducted via mail. It is essential to submit your appeal within this timeframe to safeguard your right to appeal.
When reflecting on your financial decisions from the previous year, rest assured that RapidTax will ensure they positively impact your tax return. Whether you prefer to handle your taxes independently or entrust them to a RapidTax dedicated Tax Professional, we promise to maximize your refund and ensure you receive all eligible tax credits.
