• Heights: 406-969-2760
    • 406-894-2050
    • kevin@practicaltaxes.com

    Archives for Audits

    Audits: Get Through One with the Help of Practical Taxes

    An audit is scary. It’s an intimidating ordeal to experience, especially when you have never experienced one before. Imagine this: you receive the notice that you’ve been audited, and the information comes in a letter, cold and dry, black and white. But it’s not an uncommon experience, and the statistics are that about 1% of all tax payers will undergo an audit each year. That doesn’t sound like a huge number of people, but if you are someone for whom the IRS has deemed necessary to target for an audit, you should remember that your first and most immediate option is to call your experienced accountant at Practical Taxes. 

    The main reason that an IRS audit is incredibly difficult and scary is that, when a person discovers they are being audited, it sounds as if they’ve done something wrong. But it’s very possible that they didn’t do anything wrong at all. The IRS even states that all tax documents are complex, and that the data they contain must be evaluated and sometimes evaluated with close precision to ensure accuracy. 

    If you do discover that you are being audited the first step is to respond to the IRS’s letter. The next step is to contact your tax professional at Practical Taxes. You will need to compile all the necessary documents—everything (that’s why it’s so very important to keep all tax documentation for five years!). Interesting enough is that most audits are completed through the mail. Documents are sent back and forth, etc. Some problems are so small that they can resolved quickly and easily. But make sure before you send anything to the IRS that your accountant at Practical Taxes goes over the documents; you have rights in an audit, and you want to be sure that you have someone who has your interests in mind determine if there are any discrepancies. 

    Don’t go through an audit alone. Practical Taxes is ready to answer your questions, help you review all your tax documents, and hopefully the entire audit process will be made a little bit less scary.

    Read more

    Getting Through an Audit

    An audit can be scary, intimidating, especially for someone who’s never been involved in one. The stats say that about 1% of taxpayers get audited every year. Those audited are usually in a higher tax bracket, however not always. And many times, the audit will show up inconspicuously in the mail, a straight-forwardly-written document from the IRS that’s written with very official sounding language. And it’s that it’s so official that it sounds scary: it sounds like you’ve done something wrong, maybe something criminal.

    But an audit doesn’t mean you have done anything wrong, at all. The IRS states that tax documents are complex and that the data contained must be evaluated to determine its accuracy. Not all audits are performed because of discrepancies or unusual deductions (although these are reasons), but some audits are performed to match income documents and others decided by random sampling (Lucky You!) So, what do you do when one of these letters shows up in the mail?

    Getting Everything Together

    First, the IRS is not going to “go away” if you choose to not respond to their query, so do that first—they may also call you on the telephone, so don’t panic when/if they do (also, if it turns out you owe the IRS money, then interest on the money owed could be compounding, so get on it). And then get together all the paperwork that they are requesting, if they have.

    More than half of all audits are done through the mail. If there are simple errors like incorrect math, these errors can be easily remedied. Make sure that you have all the paperwork (it’s best to keep up to five years of tax filings somewhere safe—like a file cabinet) and if you do not have a certain document request a copy be sent.

    And, contact Practical Taxes to go over your audit before you send in all your materials (if, in fact, the IRS is saying that there is a discrepancy). If you have any questions during an audit, call. Your accountant at Practical Taxes is here to make the audit process less scary.

    Practical Taxes

    Practical Taxes is a full service accounting firm in Billings, Montana. We can help you get the most from your taxes, and make sure that you will get the maximum refund every year. But we don’t just do taxes! We can help with your bookkeeping, payroll, bank reconciliation, budgeting, and more. Give us a call at 406-894-2090 to learn more.

     

    Read more