An IRS audit is a review/examination of an organization’s or individual’s accounts and financial information to ensure information is reported correctly according to the tax laws and to verify the reported amount of tax is correct.
Taxes are complex and gray areas abound. So, if you think that you filed taxes and reported everything, still there is a chance of getting Audited by IRS.
Selection of Audit does not always suggest there is a problem. You may get on random selected through computer screening.
Below may be the reasons, may trigger your Tax return for Audit:
- You claimed Alimony on your return
- You did not show all Taxable Income
- Unreasonable Itemized Deductions
- Education expenses
- Earned Income Tax Credit -EIT
- Additional Child Tax credit
- Claiming Gambling losses/Failing to report Income
- Higher Income or Lower Income as compare to previous year
- Failure to Declare Foreign Income and Assets
- Business Income and losses
Generally, the IRS can include returns filed within the last three years in an audit. If IRS identifies a substantial error, they may add additional years. They usually don’t go back more than the last six years.
The IRS tries to audit tax returns as soon as possible after they are filed. Accordingly, most audits will be of returns filed within the last two years
The length of Audit varies depending on the type of audit; the complexity of the issues; the availability of information requested; the availability of both parties for scheduling meetings; and your agreement or disagreement with the findings