Have you ever received a letter from the IRS stating that your tax return is selected for a federal audit while you have no idea why? First of all, don’t panic. The IRS selects both randomly and intentionally. Randomly selected audits are intended to request further information to ensure accuracy of the tax return. While tax audits are intentionally selected only if there are errors, issues, or potential frauds.
There are many types of tax audits, and not all of them harm your credit scores. Here are some common types of tax audits, check these out:
- Correspondence Audit
It is the most common but least serious one. In general, the IRS sends you the audit for additional documents to verify the information on your tax return. The missing documents usually include W-2’s, and 1099 income items or interest expense items. The IRS Service Center might also request you to send them copies of canceled checks or receipts to verify certain deductions. You’re likely to get the audit when the amount of your charitable contribution exceeds your income. And you often receive it by mail.
- Office Audit
When some information on your tax return is in question, you may receive a notice of an Office Audit by mail. In this situation, you or your professional tax representative will probably go to the local IRS office for a meeting with a tax auditor. Certain documents such as bank records will be requested for examination. Overall, this audit allows the IRS to check whether there’s unreported income.
- At Home Audit
You may receive the audit at your home or office, which might indicate a serious matter. The well-trained IRS revenue agents will handle your case. This may also lead to audits of other tax years and other tax deductions. Therefore, you’d better hire a tax resolution expert to help assess your options, and defend your position and your rights.