No one likes doing their taxes. The chore can be even more painful if you’ve gone through marriage, experienced the birth of a child, changed healthcare insurance providers, juggled new investments, or lived in more than one state during the year. Of course, it’s hard to go through your tax return preparation without wondering if you made a mistake. What happens if you make a big one, and then you have the misfortune of an audit? The IRS isn’t known for showing the most forgiveness to those who don’t give Uncle Sam his fee for living in the greatest country on earth, so it’s not something you should take lightly.
But why do we get audited when we file our taxes?
How much you make is the biggest concern. If you live in poverty with the rest of your family, then you don’t have all that much to worry about. But if you’re living a life of luxury, sleeping on a bed of rose petals and accidentally losing hundred-dollar bills everywhere you go, then you should probably be prepared for a tax audit at some point in life–and a meticulous one at that.
This happens to be the biggest reason why you should seek the help of certified tax preparers when tax season does come along. The more assets you maintain and the more money you make from investments, the more complicated your tax realities become. It’s important to have qualified professionals on hand to ensure that your tax returns follow all the rules. This not only saves you money (your tax preparer will work to get you every penny possible), but it can also spare you from liability in the event that mistakes are found when an audit does occur.
Another reason you might experience an audit at some point is a simple clerical error. Even one number in the wrong place can mean a huge difference in how much you owe or how big of a refund you should receive. These days, automated tax return programs can yank numbers from PDF versions of a W2 form. That can be both a blessing and a curse. While it can save you time, this kind of automation can also make errors. Make sure you double check every number you–or a computer program–inputs.
The biggest mistake you can make is failing (or forgetting) to report taxable earnings to the IRS. Don’t ever assume that the IRS doesn’t know about every source of your income, even if you think they won’t find it. Honesty on tax returns will save you a lot of time and money down the road. A Napa, California doctor recently convicted of tax evasion now faces up to three years in prison for the crime. Don’t let that happen to you.
In the event that you are audited, the services of your tax preparer may be called into question if something is found amiss. If this happens to you, then you should enlist the help of an experienced tax audit attorney who can help manage your communications and tax records during the auditing process. On top of that, representation is the best way to ensure you come out of the situation right side up. Don’t take the chance when your livelihood is on the line.