The idea of being audited by the Internal Revenue Service (IRS) is intimidating for many people, and a lot of fear comes from misunderstandings. You’re not going to go to jail—navigating an audit after you file taxes is much easier than may seem. Below are answers to common questions taxpayers have to alleviate concerns.

A Guide to Understanding Tax Audits

What are audits?

The IRS audits fewer than 1 out of every 200 Americans each year. Audits are formal requests from the IRS after you file taxes. They send them out if anything is unclear on your tax return that’s questionable. Often, they want to see further evidence of income or receipts for deductions.

The IRS performs audits as far back as three years for standard returns and six years for extensive errors. Understand that you aren’t in trouble—the IRS just has some questions that need to be answered.

What happens during an audit?

The IRS first sends out a letter explaining the audit. The message will point out details they are questioning, such as significant travel deductions for an independent contractor, and ask that you provide a copy of receipts. If it’s a simple mistake, send evidence of what they’re requesting, and the audit should be satisfied.

You may need to meet an auditor in person for larger issues if you have a complicated tax return. For example, million-dollar self-employment income, multiple property ownership, and significant charitable donations in a single return. While rare, those that can’t satisfy the IRS may ultimately go to court.

Why are people audited?

The IRS looks for several red flags. These include audits for missing paystub information, unreported income, uncharacteristically high deductions, or filing incorrectly. Low-income individuals who claim the Earned Income Tax Credit and self-employed professionals are at the highest risk because the IRS is concerned that they’re hiding income and abusing deductions.

What should I do if I’m audited?

In most cases, simply mail in the information the IRS requests. You can connect with an accountant to ensure you fully resolve the issue and avoid it next year. If the IRS isn’t satisfied, tax planning professionals can help you through round 2 until the problem is resolved.

An accountant is invaluable when it’s time to file taxes, and Balanced Bookkeeping & Tax Services of Lincoln, NE, can assist. These professionals have served the area since 1998 and provide comprehensive tax preparation services. They also help business owners with bookkeeping and planning, which you can explore on their website. Call (402) 466-4272 to schedule a consultation and connect on Facebook to receive more tax tips.