People reporting no AGI at all represented the third-largest percentage of returns audited in at 2. The majority of audits resulted in filers both businesses and individuals facing assessments of additional tax.
So while your chances of an IRS audit may be slim, if you do get audited, you could end up owing more federal income tax — and it could be a significant sum. The IRS could select your return for auditing for multiple reasons.
If your return is selected for auditing, the IRS will send you an audit letter by mail with instructions for what to do next and contact information for who to communicate with at the IRS. It will never deliver the first audit notice through a phone call.
If you face a correspondence audit, follow the written IRS request for any documents or information required. And the IRS recommends you request confirmation of receipt from whatever delivery service you choose for your correspondence. But there can be exceptions.
The IRS might call you, but only after first contacting you by mail. Nothing can guarantee you never get audited. But you can take steps to reduce errors on your tax return. While making mistakes on your tax return might not result in an audit, errors can mean the IRS needs to take a closer look at your return. Plus, mistakes can slow down receipt of any refund you may be owed. Filing electronically is the top recommendation from the IRS for how to reduce errors on your tax return.
States like e-filing, too. First, be aware that the IRS generally tries to audit returns in a timely manner — usually within two years of filing. Usually, six years is the maximum. If your return has been selected for audit, the IRS will first notify you with a letter that will tell you what you need to do to respond. That also depends. The number of years the IRS can audit will vary, for example:. Federal Tax Statute of Limitations.
Here are a the common IRS Statute lengths of time to audit. In most situations, the IRS can go back three years. That means if your tax return was due April , the IRS has three years from April to audit you if you file the return timely, either before or on the April due date.
If you never filed your tax return or file the late coming to statute of limitations does not begin to run until the returns filed. Therefore, if you wait until the day before the three-year statue limitations expires to file your tax return the IRS still has three more years to audit you. The IRS may have an extended amount of time to audit you, even if there is no fraud or criminal issues at hand come.
In these types of situations, the IRS may go back six years in order to audit you to determine whether or not you have been compliant during that time-period. Unlimited Statute of Limitations. The first situation is when a person has not filed a tax return. When a person has not filed a tax return for a particular year, the statute limitations for that year has not yet commenced.
Therefore, until the tax return is filed the IRS has unlimited time to audit. The second situation occurs when the IRS has knowledge and information that a person may have acted fraudulently. When a person acts fraudulently, the IRS is able to go back as far as it wants to audit the person.
The idea is the concept is that if a person acts fraudulently with criminal intent, then the IRS has the right to get to the bottom of the matter and is authorized to go back as far as the IRS Agent needs to obtain that information. At least to the portion of the tax return involving the foreign investments, the return remains open.
Depending on the size of your case, and which department at the IRS your matter is assigned to, it might be an in-person audit or examination, or it may be a correspondence audit in which everything is done through paper documents.
There are various pros and cons to each particular type of audit, but if you ask most people, they would probably prefer to not have to step foot in the IRS Office or even worse…have the IRS Agent visit them at their place of work. The Internal Revenue Service agents are usually not scary, and while you should always have counsel, they generally resolve pretty quickly. Some IRS Audits are little more than a few hour question and answer session about your income, deductions, or related non-threatening issues.
The TurboTax Audit Support Guarantee also includes the option to connect with an experienced tax professional for free one-on-one audit guidance.
For those who want even more protection, TurboTax offers Audit Defense, which provides full representation in the event of an audit, for an additional fee. Just answer simple questions about your life, and TurboTax Free Edition will take care of the rest.
For Simple Tax Returns Only. Taxes and Moving to a New State. Keeping Good Tax Records. What Are Tax Audits?
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Skip To Main Content. The DIF is a scoring system that compares returns of peer groups, based on similar factors such as job and income. A high DIF score raises the chances that the filer will be audited, Jensen said. Myth: Be very afraid of an audit The looming myth out there suggests the audit process is something to be desperately feared. Most people who receive a letter or notice from the IRS only need to respond to a few questions. In many cases, the IRS will ask you to simply verify some of your information or send an additional tax payment.
Myth: Professionally filed returns are audit-proof Tim Clegg, a budget software developer and retired financial coach, says paying a tax preparer may not shield you from an audit. Such steps can trigger an audit, interest and stiff penalties, he said. Myth: Those with low to moderate incomes don't get audited Jensen said the IRS has ramped up the number of audits it does in response to the country's economic woes.
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