Your Team of Rochester Accountants Debunks Myths & Misconceptions About IRS Audits
More often than not, when someone mentions audits, taxpayers get nervous. But the IRS is not here to scare you away, they are here to make sure everyone is playing by the rules. There are many rumors surrounding audits and how they work. This article provides insight to common questions about audits. Check out our answers to 5 frequently asked questions below.
- Should I be afraid of getting audited?
When people find out they are getting audited, they often assume they did something wrong. But this is not the case. Most often, the IRS is performing an audit to confirm that their information is correct. They ask themselves and the taxpayer, “our records show this. Is that right?” (turbotax). They are looking to double check the information more than anything else.
- Will the IRS show up at my door during an audit?
The IRS will only show up at your door if they schedule an examination. Most people who are being audited do not ever come face to face with an IRS agent. This is a common misconception, but we assure our clients that it should not be a cause for concern.
- Only the rich get audited, right?
Although the risk of getting audited is higher for the wealthier, they are not the only ones who get audited. Families earning less than $100,000 a year have seen their tax audit risk increase by 17% since 2010. The IRS will audit people at random or if they see suspicious activity, but a person’s wealth does not directly correlate with their likeliness to get audited.
- Will I get audited if I decide to start a business?
Tax purposes scare a lot of people away from starting a business. As long as you play by the rules and claim the legitimate expenses for your business, you should be all set.
- Should I get my taxes done by a professional to avoid getting audited?
Whether you are going to a professional or doing your taxes on your own you still run the risk of getting audited. Doing taxes on your own does not increase the risk of getting audited as long as you stick to an ethical practice. We recommend professional guidance if you need help filing and understanding your taxes to ensure that they are filed correctly.
Ultimately, business owners and taxpayers should not be scared of audits. Practicing ethical business and following tax guidelines should provide owners with the sense of security for an audit if it comes their way.
Davie Kaplan’s tax department is committed to providing expert and responsive audit, review, compilation, and other attestation services. Each engagement is individually tailored to your specific needs by experienced professionals. Our tax services comply with industry guidelines and regulatory pronouncements, as well as auditing, review, compilation or other attestation standards. Contact us to learn more today.