By Deborah Ritz
I have received a notice from the IRS. They need more information on my last year’s tax return. What do I do?
If you do get an audit letter, the first thing is to determine what part of your tax return is being audited.
Often the IRS auditors will have questions on a portion of the tax return, not the entire thing.
With most tax payers, the IRS has access to all their information, such as their total wages and how much mortgage interest they paid.
However, returns filed by self-employed people and the wealthy tend to have a lot more self-reported items that the IRS may question.
Tax payers facing an audit have to review their return to make sure everything is accurate.
Only provide the information the IRS specifically asks for to avoid broadening the scope of the audit.
Once you know what the IRS is looking for, the next step is getting documentation that proves your claims.
For example, if you are being audited because you wrote off a percentage of your car usage as a business expense, get your mileage log and other evidence that the car was used only for business purposes for that percentage of time.
If you haven’t saved any documentation or proof that your claim or claims are valid the IRS can estimate from past returns.
If you are not comfortable with the IRS doing this, try to provide third party evidence in the form of a recreated invoice, donation record etc.
The IRS has up to three years to audit your tax return so that just-received letter could be from your 2011 taxes, which is why you should keep tax documents for at least three years.
Ignoring an IRS letter could only make the situation worse.
The IRS will give you a certain deadline to respond, so make sure to meet it.
If your return was prepared by an accountant or tax preparer let that person handle the discussions for you.
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Questions for Deborah Ritz can be e-mailed to The Weekly Adirondack at WeeklyADK@yahoo.com