6 Ways To Take The Fear Out Of Audits

No one wants to be audited by the IRS. It’s generally thought of as a painful and invasive process, one that ends with severe financial penalties. If you’re being audited, though, you don’t need to be afraid. Try to do the six things below in order to take some of the fear out of your audit. 

Get a Lawyer

As soon as you know that you’re being audited, you need to hire an attorney. It’s incredibly important that you hire someone who has a background in tax law to help you through this experience, even if you’re sure that you have done nothing wrong. Not only will a good lawyer help you to wade through the process a bit more easily, but he or she can also help you to feel a bit more confident when dealing with the IRS.

Calm Down

The next, and perhaps hardest, step is to try to stay calm. Audits happen all the time and most of them don’t actually result in anything major happening to you or to your business. It’s fine to feel stressed, but try to realize that audits are quite impartial and the IRS is genuinely just trying to ensure that all of its paperwork is done. For most, the worst-case scenario is owing a bit of money – you’re not going to go to jail and your life almost certainly will not be ruined by this administrative process. 

Turn to Your Paperwork

Your best friend during the entire audit is going to be the paperwork that you’ve already generated. Go ahead and gather up everything that you’ve used to prepare your taxes in order to speed along the process. If you think there’s anything in your taxes that might be suspect, make sure to go back and get extra documentation. Having the receipt for everything from a charitable donation to the gas you spent when driving the mileage you claim is a great way to prove that you were honest on your taxes. 

Understand the Consequences

Knowledge is always the best way to combat fear. If you are being audited by the IRS, go ahead and audit yourself to figure out what they might find. If you do notice that there is some kind of discrepancy between your income and what you have reported, take take a moment to look at the realistic consequences of your actions. In most cases, you’re going to end up owing money to the IRS – and in some cases, you may also have to pay a penalty. When you’re aware of what will probably happen next, it will be much harder to approach the audit itself with a sense of fear. 

Prepare a Payment Plan

Another good reason to stop being afraid of the audit is that the IRS is, generally speaking, very easy to work with. One of your best bets for staying solvent is to work out a payment plan with the IRS if you are found to have a discrepancy. Start looking over your finances to figure out what you might be able to pay each month and whether you might be able to offer a lump-sum compromise. You’d be amazed by how willing to the IRS is to work with people who have made mistakes on their taxes. 

Start Planning for the Future

Finally, take some time to start planning for what comes next. It’s hard to be afraid if you have a plan, so think about how this audit will impact your plans. Start working on making sure whatever processes that caused the discrepancy don’t fail again and make sure you adjust your budget for any penalties that you might have to pay. It can be tough to think about what comes after the audit, but simply realizing that your life will go on can play a big role in helping you move forward. 

Try to remember that an audit is not the end of the road. Make sure that you are properly prepared and that you contact a professional for help, but don’t let yourself despair. Audits happen more frequently than you realize, and you can get back to your normal life once yours is over.

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