March 15th 2024.
When I first saw the date of the letter, my heart sank. January 10, 2018. I knew what it meant. The dreaded Internal Revenue Service had requested to audit my tax return. My mind raced with reasons why they would choose me. Did my income not match what was reported to them? Were my expenses raising suspicion? Whatever the reason, one thing was for sure - I had to be prepared.
As someone who used to work for the IRS, I have witnessed numerous audits and have learned the key to surviving this unwanted ordeal - knowing your rights and responsibilities. It's important to understand what items are being audited and to carefully review the examiner's document request. This will give you an idea of what items you need to substantiate on your tax return. It's important to remember that during a civil tax audit, the burden of proof lies on you.
Gathering documents to support questionable items on your tax return is crucial. But if you don't have any records, don't lose hope just yet. There are other ways to substantiate items, such as obtaining patient records if you work in a field like home health care and previously claimed vehicle expenses. Examiners are allowed to accept various types of evidence, including third-party testimony and affidavits.
If the mere mention of the IRS makes you uncomfortable, it might be best to seek representation. This could be a certified public accountant, an enrolled agent, or a tax attorney. Once you have informed the IRS examiner that you have representation and have completed Form 2848, Power of Attorney, all future communication will be with your representative, relieving you of the stress of dealing with the IRS directly.
But don't give up if you don't agree with the examiner's findings. You have rights. First, try raising your concerns with the examiner and see if a compromise can be reached. If not, you can request a meeting with their manager or even appeal the case. Both the examining group and appeals have the ultimate goal of closing the case without a trial, so persistence could lead to favorable results.
In other news, President Joe Biden has proposed a $10,000 tax credit for first-time homebuyers. This could be a game changer for many individuals looking to purchase their first home.
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