There is nothing more frightening than opening your mailbox and finding a letter that has "Internal Revenue Service" in the return address section of the envelope. Any number of questions will go through your mind: "What did I do wrong?"; "Did my tax professional make a mistake?"; or "Did I forget to report some income?"
While each of these questions are important to you, the reason for the IRS letter can range a a typo to non-cash contributions to foreign forms. How can you as a taxpayer be prepared just in case a letter requesting verification of something on the tax return arrives? Advance preparation and documentation is always the best. Some of the biggest issues are non-cash contributions. If you are donating an item of significant value, an appraisal is always the best way to ready for the documentation request. You can even include the appraisal with the tax return.
Consistent losses on Schedule C can also trigger an audit. You really need to keep good documentation of your efforts to make a profit.
I have only briefly covered two of the reasons why your return may be audited. In all events it is best to always have the documents easily accessible for the positions you are taking on your tax return, just in case. Prompt and thorough responses to the IRS are always best.
An Enrolled Agent can represent you before the IRS in these cases to reduce your anxiety and worry of dealing with the IRS on your own.
525 N Cascade Ave., Suite 200
Colorado Springs, CO 80903
(719) 359-8789
success@cashtracksfinancial.com
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