Quiz: Do you know how to Prepare for an Income Tax Audit?
There are few letters more dreaded than one telling you you're being audited. However, with proper preparation, there should be little to fear. Take our quiz to see if you know how to prepare for an impending audit -- and how you can keep the tax man away in the future.
In 2007, approximately what percent of all U.S. individual tax returns did the Internal Revenue Service (IRS) audit?
How many different types of income tax audits does the Internal Revenue Service perform?
What less frightening term does the Internal Revenue Service use for an audit?
request for information
Which examination method does the Internal Revenue Service use for the most common tax return problems?
In which type of audit will an Internal Revenue Service examiner come to see you at your home or office?
How long do you have to appeal the Internal Revenue Service's findings from their initial examination?
If you still disagree after your appeal has been heard, what is the next level of dispute that is open to you?
Why should you not continue to appeal unless you're certain you are correct in your claims?
Any fines you owe will continue to accrue interest.
Any appeal action will become part of your permanent criminal record.
Any appeal increases your chance of being audited in the future.
What percent of taxpayers who earned at least $1 million in 2006 did the IRS audit?
How does the Internal Revenue Service choose most of the tax returns it examines?
through a computer program
Each IRS agent pulls a certain number from the returns he or she reviews.
What is the statute of limitations for examining fraudulent income tax returns?
What is the statute of limitations for examining an on-time return that is not suspected of fraud?
What should you do if you have a legitimate business expense that you know may look suspicious to an Internal Revenue Service auditor?
Keep all receipts and other documentation.
Don't claim it unless necessary.
Have someone else claim it.
What is one way to minimize the chances that you will be audited for your income tax return?
Look at the average tax liability for others in your profession and see if yours is in line with that.
Always have your refund go toward your taxes in the following year.
Round off all numbers when completing your tax forms.
Why might you be audited even if you file your tax return on time and with no noticeable irregularities?
There are some random audits done every year.
Everyone gets audited at least once every 15 years.
The Internal Revenue Service chooses some correct returns to audit each year to show they are not biased.