What is an IRS Audit?
An IRS audit is a review of your financial records and tax return to verify that the information you provided is accurate and complies with tax laws. The IRS may conduct an audit through:
✔ Mail (Correspondence Audit) – The IRS requests additional documents or explanations via mail.
✔ Office Audit – You must visit an IRS office to provide documentation.
✔ Field Audit – An IRS agent visits your home or business for an in-depth review.
📌 Did You Know? Less than 1% of taxpayers get audited, but the chances increase based on income level and certain red flags.
What Triggers an IRS Audit?
While the IRS selects some tax returns randomly, certain factors may increase your risk of being audited:
🚨 High Income – Taxpayers earning over $500,000 are more likely to be audited.
🚨 Large Deductions or Losses – Excessive business expenses, charitable contributions, or losses that don’t align with your income can raise suspicion.
🚨 Unreported Income – The IRS cross-checks W-2s, 1099s, and bank statements. Failing to report all income can trigger an audit.
🚨 Round Numbers – If your return is full of rounded numbers ($5,000 instead of $4,937), the IRS may question your accuracy.
🚨 Claiming 100% Business Use for a Vehicle – This often leads to audits unless properly documented.
🚨 Frequent Home Office Deductions – The IRS closely examines home office claims to ensure they meet strict requirements.
💡 Pro Tip: Keep detailed records and only claim legitimate deductions to minimize audit risk.
What Happens During an IRS Audit?
If you receive an audit notice, don’t panic! Here’s what typically happens:
✅ IRS Notifies You – You’ll receive an official letter (never a phone call or email) outlining the reason for the audit and the requested documents.
✅ You Provide Documentation – The IRS may request tax returns, receipts, invoices, or other supporting records.
✅ The IRS Reviews and Responds – After reviewing your documents, the IRS may:
- Accept your return as filed (audit closed).
- Make adjustments and require additional tax payments.
- Request further documentation for clarification.
📌 Important: You have the right to dispute audit findings or appeal IRS decisions.
How to Prepare for an IRS Audit
✅ Stay Organized Year-Round
- Keep tax records, receipts, bank statements, and invoices for at least three to seven years.
- Use accounting software or hire a tax professional to maintain accurate records.
✅ Respond Promptly to IRS Notices
- Ignoring an audit notice can lead to penalties or further scrutiny.
- Provide clear and complete documentation as requested.
✅ Consult a Tax Professional
- Having a tax expert or Enrolled Agent (EA) represent you can reduce stress and improve outcomes.
- They can communicate with the IRS on your behalf and negotiate settlements if needed.
How JMDXY Services Can Help You Handle an IRS Audit
At JMDXY Services, we provide expert audit representation and tax resolution services to help you:
✔ Respond to IRS audit notices professionally and accurately.
✔ Gather and organize all necessary tax documentation.
✔ Negotiate with the IRS to minimize tax liabilities and penalties.
✔ Appeal IRS decisions if needed.
📞 Facing an audit or need tax guidance? Contact us today to ensure you’re prepared and protected!