California has a reputation for heavy-handed taxation, and many taxpayers who have undergone a State tax audit can confirm that the reputation is well-earned. From residency issues to sales tax reporting, a whole host of nuanced tax laws and procedures can lead to an audit. In that event, it’s important for any taxpayer facing a California tax audit to secure legal representation early in the process.
To learn more about Jin Kim’s audit defense practice call her office at (916) 299-9913 for a free consultation.
Earned Income Tax Credit Audit
Internal Revenue Service audits frequently target the earned income tax credit and can result in tens of thousands of dollars in tax liability after penalties and interest. If the IRS has initiated an EITC audit you can increase your chances of protecting your EIC tax credit by contacting a local tax attorney. A tax lawyer can help you respond to the correspondence audit.
Winning Your Audit
One comforting thought people hold when they receive notice of an audit is that they might get away unscathed – or even receive a refund from the government. It certainly helps to maintain a positive outlook on the matter, since audits can be stressful and time-consuming. Realistically, there’s no assurance of how the audit will turn out. There are a lot of things that can happen between you receiving the notice and finally ending the audit. While some factors may be out of your control, there are also things you can do in order to make sure that the odds are stacked in your favor.
What Does It Mean To Win An Audit?
We’ve all heard stories about people who received an audit notice and then ended up receiving a refund from the government. It’s the kind of story that can be comforting, even hopeful. But it’s also important to note that stories like this are often the exception rather than the rule. There’s a different definition of ‘winning’ when it comes to audits; it’s not always about earning money.
In fact, most audits end up unfavorably on the taxpayer’s end. There are many reasons for this, some of which we’ll discuss below. It’s always best to temper your expectations when it comes to audits. As far as audits go, not being levied additional taxes is considered a win.
What Can I Do To Win?
Preparation is key. The most common audit problem is poor record keeping. IRS examiners often state this fact themselves. The best thing that you can do, even if you haven’t received a notice of audit yet, is to keep good records of your financial dealings. Keep receipts that are necessary and other forms of evidence that you might need. It doesn’t have to be a complicated system – you can just toss it into a shoebox if you feel like it. The important thing is that there should be a method to support the information on your tax return. Try to segregate your files by the year at least, and by the type, if you can.
Now, let’s look at your tax return. Do you still remember the circumstances during the time you made it? If you didn’t make it yourself, there may be a chance that it all looks like Greek to you. If you’ve hired someone to do your taxes, pay them a visit and ask them to explain the information on your tax returns. Go over every detail and sort out any possible problem areas. You don’t want to look like you don’t know anything in front of the examiner.
If you’ve prepared your tax returns yourself, chances are you already have a good grasp of taxes. Still, if there are items that you think may be problematic, then you should pay a visit to a licensed tax professional, such as a tax lawyer. Have them look over your tax return and ask if there’s anything you should be worried about. A seasoned pro will be able to tell you which problems might arise during your audit and why you were chosen for an audit. If your budget allows for it, you can even hire a tax lawyer to represent you. You’ll have more peace of mind knowing you’re being represented by a professional with experience defending clients under audit and who regularly deals with the IRS and FTB.