What Is a Tax Audit?
An audit is when the IRS assigns an agent to review your tax return and verify all the claims made on your return for accuracy. An audit will require you to provide records proving that you earned the money, made the deductible purchases, and invested the way that your tax return suggests. If you're organized and are able to provide these documents, an audit is nothing to fear.
Generally, there are three different types of audits:
Correspondence Audit
If your return has only a few small mistakes or infractions, the IRS may send you a letter detailing what documents they need in order to rectify the problem. This is called a correspondence audit. As long as you respond promptly and correctly, it's a painless process. Once you have sent the proper copies back to the IRS in the provided envelope, the audit is over.
Field Audit
When an IRS agent comes for a personal visit, it's called a field audit. The agent travels to your home or business to verify the documents in person. A field audit usually only happens if a business is involved. If you run a business from home or are a business owner/operator, the IRS will want to see that you are keeping organized records and filing accurate taxes as required by law.
Office Audit
For an office audit, a specific appointment time and place is set for you to bring the requested documentation to the IRS representative for review. These types of appointments range in subject matter but usually involve relatively simple matters that are easy to correct.
