Here are 3 simple rules to follow to never fear an audit again.
First, never speak to the IRS. Your tax advisor should be confident in his or her ability to deal with the IRS, and he or she should always be the one to speak for you and be your advocate in the event that the IRS contacts you.
Second, always keep proper documentation of the expenses you’re going to deduct on your tax return. Remember that no expense is deductible unless it’s approved in the tax law. You need to maintain physical copies of all of your documentation for at least 7 years. Make it a habit to scan your receipts.
Third, have your tax advisor prepare your tax return. You need a team around you to build your wealth. Your tax return is the basis for an audit. If audited, the first thing the auditor will ask for is a copy of your tax return. Ask your tax preparer what information should be kept so that you can defend an audit if necessary. We insist everyone in our network maintain good work papers for clients. For example, we will scan and upload your information and give it back to you. Your tax advisor should want as much information as possible to be prepared for an audit. In addition, your tax advisor should have information so they can see the impact on your taxes, see how high your taxes are, and suggest dozens of ways to reduce them while preparing your tax return. Remember, your tax advisor’s #1 job is to ask you questions. Make sure he or she maintains good documentation on your behalf. Inquire what documentation your tax advisor needs from you and what documentation they retain. By doing these things, you’ll be able to feel secure and confident that you’ll be able to weather the storm of any audit from the IRS.
Want to learn more about how you can make way more money and pay way less in tax? Book a call with the team at TFW Advisors® today!