When it comes to tax audits by the IRS, there are two main types: face-to-face audits and correspondence audits. Face-to-face audits are an in-depth investigation of a taxpayer’s finances, and tend to only apply to those who omit substantial income, fail to show income to support their lifestyle, or are in other similar situations. As a wage-earning taxpayer who tries to pay your taxes honestly and correctly, you’re more likely to experience a correspondence audit. This type of audit is initiated by the IRS to double-check information when there are discrepancies on your tax return.
There are many reasons the IRS might reach out to you for a correspondence audit, including:
- Alimony paid does not match ex-spouse’s reported alimony received
- Tuition paid does not match educational institution’s 1098-T of tuition received
- Mortgage interest paid does not match lender’s 1098 report of interest received
- Significantly amended returns related to financial institution and brokerage firm forms
- Checking charitable contribution documentation
The vast majority of correspondence audits can be resolved via mail or other communication, but they can result in additional tax liability, so it’s important to not take them too lightly.
Remember, the IRS does make mistakes, so don’t assume you’re the one in error. Before responding to any audit, including correspondence audits, make sure you consult with a qualified tax professional for assistance. In Milwaukee, Taxation Solutions, Inc. is happy to provide audit defense for all types of audits by the IRS, including correspondence audits. Contact us today to get started!