How to Handle a Tax Audit: What You Need to Know

How to Handle a Tax Audit: What You Need to Know

A tax audit can be intimidating, but with the right knowledge and preparation, it doesn’t have to be a nightmare. Understanding why audits happen, what to expect, and how to respond can make the process smoother and less stressful. Whether you’re an individual taxpayer or a business owner, MacNeal CPA is here to guide you through every step.

What Triggers a Tax Audit?

The IRS selects tax returns for audits based on various factors, including:

  1. Math Errors or Inconsistencies – Simple miscalculations or discrepancies can raise red flags.
  2. Unreported Income – If your reported income doesn’t match IRS records (such as 1099s or W-2s), it can trigger an audit.
  3. High Deductions or Losses – Excessive deductions compared to your income level may attract scrutiny.
  4. Self-Employment or Cash Income – Freelancers and business owners who report cash transactions often face more audits.
  5. Random Selection – Sometimes, returns are selected purely at random as part of IRS compliance checks.

What to Expect During an Audit

If you’re audited, you’ll receive a formal notice from the IRS detailing the specific areas under review. Audits can take place in three ways:

  1. Correspondence Audit – The IRS requests additional documentation by mail.
  2. Office Audit – You may be required to visit an IRS office with supporting documents.
  3. Field Audit – An IRS agent visits your home or business for a more in-depth review.

The audit process typically involves providing documentation to substantiate your income, deductions, and credits. Keeping organized financial records is crucial to making this process easier.

How to Prepare for a Tax Audit

  1. Stay Organized. Keep clear records of receipts, invoices, tax returns, and supporting documentation for at least three years.
  2. Review Your Return – Identify potential discrepancies or errors before responding to the IRS.
  3. Respond Promptly – Ignoring an audit notice can lead to penalties or further scrutiny.
  4. Know Your Rights – Taxpayers have the right to appeal audit findings and request professional representation.

How MacNeal CPA Can Help

Facing an audit alone can be overwhelming, but MacNeal CPA can guide you through the process with expert support. Our team will:

  1. Review your tax return to identify potential issues before responding.
  2. Communicate with the IRS on your behalf to ensure a smooth audit process.
  3. Gather and organize documentation to support your claims.
  4. Provide expert representation if further action is required.

With our professional assistance, you can confidently navigate your tax audit and minimize potential liabilities.

Need Help with a Tax Audit? Contact MacNeal CPA Today!

Don’t let a tax audit overwhelm you. MacNeal CPA is here to help you every step of the way, ensuring your rights are protected and the process runs smoothly. Contact us today for expert tax audit support and peace of mind!