Though filing taxes is pretty stressful in its own right, there's nothing like the thought of being audited to cause your anxiety levels to skyrocket. Now your chances of being audited are pretty low, as less than 1% of all returns make the list each year. But if you do land among the unfortunate few whose returns wind up subject to further scrutiny, don't panic.
First of all, know that the vast majority of audits are the correspondence variety, where the IRS requests more information by mail, and you respond in the same manner. It's pretty rare for you to sit down face to face with an actual agent, partly because most situations don't warrant it, and partly because the IRS has limited manpower and therefore aims to settle things by mail first. But if you end up having to deal directly with an agent, here's how to get through the process.
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1. Only give the IRS the information it asks for
The point of an audit is for the IRS to verify that certain aspects of your return are accurate (for example, that you're not exaggerating any business expenses or deductions). Therefore, you'll generally be asked to provide records in support of your claims. And while you should absolutely comply with that request, don't err on the side of oversharing, either. You might think that by providing additional documentation, you'll come off as helpful, but what that might really do is open up a new can of worms that complicates matters or gets you into trouble. Therefore, make sure you understand exactly what information you're being asked for, and provide only that.
Along these lines, be sure to retain a copy of any document you provide to the IRS. This way, you'll have that information available should the matter wind up escalating.
2. Be respectful
Though an in-person audit might seem adversarial in nature, remember that IRS agents are people, too. Like you, they have a job to do, and if that means combing through your finances and verifying the information you provide, so be it. You won't be helping your case by being short or snippy with the agent assigned to your return, so when you're asked questions, answer politely. The more cooperative you act, the more smoothly your audit is likely to go.
3. Enlist help if needed
Maybe you're too nervous to fathom the thought of sitting down with an IRS agent face to face. Or maybe you're iffy on some of the information your tax return included, either because you no longer have the documentation to support it or you're just plain baffled by the tax code in general (which, incidentally, is probably how most people feel). No matter the exact circumstances, if you don't think you're equipped to have that conversation with an IRS agent directly, enlist outside help -- namely, the accountant who handled your return. With any luck, that person provides audit support either free of charge or for a modest fee, in which case it's worth getting that backup.
But don't rush to hire a tax attorney for an audit. Not only will this likely be expensive, but it's generally an unnecessary step that early in the game. Remember, an audit is really just a more in-depth examination of your tax return; it doesn't mean you're being charged with a tax crime or anything of the sort. You generally only need a lawyer if the IRS does indeed charge you with tax evasion or fraud -- and usually, that only happens in extreme cases. A more likely outcome, if you were in the wrong, is that you'll need to adjust your return as per the IRS's findings and pay any back tax plus interest from the time that money was initially due.
Nobody wants to get audited, but if you land in that scenario, don't assume the worst. Besides, you never know when an audit might actually work out in your favor. Back in 2015, the IRS issued $1.1 billion in refunds to taxpayers whose returns were audited, which just goes to show that being chosen for an audit isn't always the dire scenario the movies make it out to be.
