Mature Life Features

Cecil Scaglione, Editor

IRS Audit Needn’t be a Four-Letter word

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If you’ve been audited by the Internal Revenue Service (IRS), you know it’s a pain in the neck.

If you haven’t been, there are some simple steps to take to alleviate as much of the pain and panic as possible. This is as good a time a year as any to begin.

The first thing is to make certain you have documentation supporting all income and expenses — receipts, canceled checks, and bank, credit-card and dividend statements, for example. Keep these records for at least three years. The IRS has three years from the date you file a tax return to audit it, according to the Financial Planners Association.

The IRS has up to six years to challenge your return if it thinks you have under reported your income substantially. You need the documentation to prove them wrong.

However, if you didn’t file a return or filed a fraudulent one, you’re subject to an audit at any time.

Your state (and your city, if it has an income tax) have time-expiration dates that may differ. If you file tax returns in another country, add those expiration dates to your calendar and make certain you keep tax records long enough so that you don’t get caught without documentation if your return is questioned.

The IRS treats everyone equally: you’re guilty until you prove your innocence.

That’s why a letter from the IRS can send shivers through anybody who receives one. The first rule here is, don’t ignore it.

Most notices include a deadline for responses and the IRS will expect to hear from you by that date.

If you have a tax-preparer, take the IRS notification to him or her immediately.

If you don’t have a tax preparer and the IRS is requesting additional information, make copies of the necessary documents and send them to the agency right away.

Even after all challenge limits expires, it’s a good idea to keep your tax returns for a few years extra, along with such documents as your year-end mortgage and investment- portfolio statements. It’s also a good idea to keep on file all records for assets you still own, ranging from your house to automobile to major appliances and jewelry.

If you don’t maintain your records and if the IRS asks for more information than you have kept, the agency is going to assume that you tossed them out for a reason — that you may be hiding something.                     

Written by Cecil Scaglione

March 1, 2022 at 3:00 am

Posted in News / Events

Tagged with , ,

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