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Preparing for an IRS audit

For Georgia taxpayers, an IRS audit is often one of their greatest fears, after paying the taxes themselves. There are some tips that can hopefully help reduce the chance of an audit and the problems that come with it.

Experts recommend that taxpayers prepare their tax return through tax preparation software, since this produces a neat and organized return. Additionally, the software will look for possible errors and help to maximize deductions. When large amounts are included in deductions, proof of these amounts should be attached. Additionally, the numbers should not be rounded off, as this gives the impression that the numbers may not be accurate. Those who are filing their returns with a Schedule C, which details a business's profits and losses, may be better off including this as income elsewhere on their return in order to avoid heightened tax audit risk.

In the case of an audit, it is recommended that the taxpayer request an extension of time before the audit itself. This may help to push past the three-year deadline for the audit to take place, except in cases of fraud or significant underreporting. The taxpayer should not offer more information than requested, but must be prepared to prove entitlement to the deductions and credits claimed. Lastly, the IRS offers an appeals process and the auditor is available to answer questions about the audit when things do not turn out in the taxpayer's favor.

A tax audit can be a difficult process for a taxpayer without professional assistance. An attorney with experience in audit defense may be able to help prove that the taxes were paid correctly or negotiate a settlement with the IRS.

Source: Findlaw, "What to Do if the IRS Audits You", August 19, 2014

Source: Findlaw, "What to Do if the IRS Audits You", August 19, 2014

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