What documents do you need for an IRS audit?

Texas residents may be concerned about getting selected for an audit by the Internal Revenue Service. However, having knowledge about what the process can entail and what a person’s rights are in the process can go a long way toward addressing many concerns. First of all, its important to know that an audit does not always mean that there is a problem. It is possible someone is selected for an audit based on a statistical formula. Tax returns are compared against similar tax returns with the help of a computer program. Tax returns can also be selected for an audit if they involve issues with other taxpayers whose audits were selected for audit.

The IRS will provide the selected individuals with a written request for the specific documents that will be needed as proof to support the income, credits or deductions being claimed. All of these documents would have already been used to create the tax returns; they are not new ones. The request will also state how the documents should be presented, and when doing so it is important to ensure they are organized according to year, in order to prevent errors or misunderstandings.

Although every audit is different, depending on the circumstances of the case, there are some general documents that will be requested to verify claims. For example, receipts and bills, legal papers such as divorce settlements, property acquisition or tax preparation, loan agreements such as copies of the loan along with the settlement sheet, financial institution making the loan, the terms of the loan and the amount borrowed, travel tickets and employment documents, might be requested during the course of an audit.

It is also important to know that if a Texas resident disagrees with the audit decision, that person can appeal the decision. Creating IRS audit defenses and appeals may seem complicated, but it is vital when it comes to protecting your rights.