Many Americans fear the words “tax audit.” An income tax filer dreads the thought that one little math error will cause the Internal Revenue Service to flag his or her return.
Now, after hearing that the IRS will scrutinize all suspicious returns prepared by one Jackson Hewitt franchise, a good many folks who have yet to file are probably double-checking their returns.
The IRS has said that only returns from the franchisee’s 125 offices are being specifically targeted. It is not singling out all Jackson Hewitt outlets. But that doesn’t mean everyone else can breathe a sigh of relief.
Although the chance of being audited is slim – less than 2 percent of all returns each year, according to one report – the agency is doing more audits.
According to a recent IRS report, it audited 1,293,681 individual returns in 2006, a more than 6 percent increase over the previous year. The number of field audits, in which an agent requires a face-to-face meeting with a taxpayer, jumped 23 percent during that time.
New technology has helped the agency better match income reported by employers, banks and other institutions with individual returns.
Also, more people are filing returns online, which reduces the amount of time that tax agents spend analyzing returns manually, freeing up time to conduct more individual audits.
If you are worried about being audited someday, keep in mind that the best defense is a good offense.
Be sure to gather evidence needed to support your tax case, such as receipts, spreadsheets, mileage logs, bills and medical records.
Bring documentation only for tax items specified in the IRS tax audit notice.
If your audit involves medical bills, you can call your doctor’s office to get copies of billing statements. You can get in contact with county officials to get proof of the amount of property taxes you paid. Compile the documents, making them neat and orderly.
Find out what sorts of questions were asked and which records were required. This will help to reduce your stress about the meeting.
