How Far Back Can the IRS Audit You?

Dealing with the IRS because you made a mistake on your tax return or you haven't paid your taxes is a stressful process, and it's almost always best to hire tax resolution professionals to help you out. If you are worried about how you filed your taxes this year, you might be wondering about the auditing process. How far back can the IRS audit you? Fortunately, there is a time limit, and in most cases, an audit happens in the same year you filed your return.

While many people get chosen due to an error or omission, some are also selected randomly, so getting an audit is not always something to worry about. By speaking to your tax professionals and following their guidelines throughout the process, you'll be able to resolve the issue with minimal hassle.

How Far Back Can the IRS Audit You?

Once you file your tax return, the IRS generally has three years to start an audit. In most cases, they will do so as soon as possible, usually within the first year, so you are unlikely to be audited for any previous years unless a problem has been discovered recently. It is also interesting to note that this statute of limitations applies from the date you filed your taxes, not from the annual due date.

Thus, if you filed early, the IRS's deadline will come sooner than if you filed on the last day possible. If they find a significant issue with one of your older tax returns, they might extend the three-year deadline, but it is very unlikely that they will audit you for a return you filed more than six years ago.

Why Might You Be Audited?

There are several reasons why the IRS might decide to investigate you. Every year, they choose some people at random, although your chance of being audited is much higher if you have made a mistake or failed to file or pay your taxes. There is a lot of paperwork involved in an audit, so you should contact a specialist no matter if you believe you have made a mistake or not. That way, you can be sure that you are presenting your info to your advantage.

Randomly

There is a "tax gap", which is the difference between how much the IRS is owed and the amount that is actually paid. To minimize this gap and make sure that most people pay their taxes, the IRS audits a certain percentage of the population every year. While your chances of being chosen in any given tax year are minimal, usually below 0.2%, you should nevertheless be prepared to receive the letter.

Even if you conscientiously fill out your return and pay on time, the IRS might randomly select you and have a look at your paperwork. Taxpayers who haven't made a mistake or failed to pay their taxes shouldn't have anything to worry about. By working with an experienced tax specialist, your case can be closed within a few weeks or months, and you won't face any penalties.

You Didn't File Your Taxes, Filed Late, or Paid Late

Filing or paying late usually comes with fines, and they increase the longer you leave your return. For the first five months, you'll pay 5% extra for every month you haven't completed and sent in your return. On top of this, you'll also have to pay interest. If you haven't filed your taxes at all in a previous year, it's better to contact a tax specialist now, before the IRS notices, since failing to file is illegal and could come with severe penalties.

The IRS is slightly more likely to audit a late return than one that has been filed on time. While back tax returns are evaluated in the same manner as regular returns, they are sometimes selected for an audit, particularly if your tax situation is complex. This is the case for self-employed people or business owners, who don't earn Form W-2 wages.  


You Made a Mistake

People who attempt to do their own taxes sometimes make mistakes such as typos or math errors. Although this can happen to anyone, the IRS is quite strict about such issues. If you haven't double-checked all of your numbers and they appear suspicious as a result, this might alert the IRS to a potential problem, and you'll get audited.

You Gave Yourself an Undeserved Deduction  

An issue that often comes up with self-employed people is deductions. While you should deduct legitimate business expenses and charitable donations, you can't include anything you use for leisure purposes or that doesn't help you to earn an income. If your deductions are very large compared to your income, this might increase your chances of getting noticed by the IRS.

What to Do When You're Being Audited

How far back can the IRS audit you, and why would they do this? The best person to ask is your tax specialist, who can help you to file a normal return or get through an audit without further complications. Receiving a letter from the IRS that you're being audited isn't pleasant, but it doesn't have to be detrimental.

Your tax resolution professionals can prevent you from making a mistake that could harm your case. If you collaborate with them and follow their advice, there is no reason why you should have trouble with your audit.

Contact Competent Tax Resolution Professionals

Whether you've already been audited or you're worried about filing your return, the first step to take is to get in touch with a tax professional. Once you've booked an appointment, they will request more information about your situation, so they can figure out how to best help you. With in-depth knowledge of the US tax system and direct channels of communication with the IRS, your specialist can quickly and competently resolve even challenging tax issues.

Cooperate

When working with your professional, keep in mind that they have your best interest at heart. The information and advice they give should be followed closely, particularly if you have run into an issue such as owing back taxes or being audited. Always get back to your specialist as soon as possible to avoid missing important deadlines and, unless they can get your penalties abated, you should pay them as soon as possible.

How far back can the IRS audit you? In most cases, the answer is three years, but it depends on your individual situation. Unless you are chosen randomly, you might be audited because you didn't file your taxes, you made a mistake on your return, you made a suspicious deduction, or you didn't pay your taxes. The best way to resolve the situation is to contact competent and experienced tax resolution professionals and let them handle the paperwork.


Your specialist will discuss your situation and let you know how you can best fight for your rights. They can also help you to file your tax return more easily in future years, so you never have to worry about audits and back taxes again. Get in touch with us at Tax Alliance in Santa Ana, CA to find out more about our services and book your first appointment with a professional. We will be more than happy to help you resolve your tax problem.

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