IRS Audit Checklist: What to Expect and How to Prepare
The thought of an IRS audit can be daunting. Whether your return is flagged because of discrepancies, random selection, or comparisons to others in your industry, one fact remains: preparation is key.
The IRS will expect you to provide clear documentation that supports what you reported on your return. Without it, you risk penalties, interest, and extended scrutiny.
This guide covers what to expect during an audit, which documents you may need to provide, and the best ways to prepare.
What to Expect During an IRS Audit
An IRS audit is a detailed review of your financial records to verify compliance with tax laws. Here are the major steps you can anticipate:
1. Preparation
You will need to gather all relevant financial documents, including receipts, invoices, contracts, and bank records.
2. Planning
The auditor will establish the scope of the audit and identify specific areas they intend to review.
3. Fieldwork
Auditors may conduct on-site inspections, interviews, and a review of physical and digital records.
4. Findings
After their review, auditors will issue a report outlining discrepancies and recommendations for resolution.
5. Follow-up
You will be required to address findings, pay any penalties, or provide additional documentation. In some cases, corrective measures may also be suggested.
IRS Audit Checklist: Documents You May Be Asked to Provide
During an audit, the IRS will want proof that supports the income and deductions listed on your return. Commonly requested documents include:
Proof of Income
- W-2s, 1099s, and other income statements
- Records of any additional earnings
Expense Records
- Receipts for business costs, charitable contributions, and medical expenses
- Documentation for itemized deductions
Bank Statements
- Complete records to verify deposits and withdrawals match your return
Investment Records
- Brokerage statements
- Certificates of stock, bonds, or other investments
Business Records (for self-employed or small businesses)
- Ledgers and invoices
- Contracts, payroll records, and expense logs
Home Office Expenses
- Utility bills, mortgage or rent statements
- Documentation of repairs and maintenance costs
Vehicle Expenses
- Gas and maintenance receipts
- Mileage logs for business use
Retirement Contributions
- Proof of IRA, 401(k), or other plan contributions
- Employer contribution records
Charitable Contributions
- Receipts from charitable organizations
- Bank or credit card statements verifying donations
How to Prepare for an IRS Audit
An audit outcome depends heavily on how well you prepare. Take these steps to strengthen your position:
- Gather documentation early: Collect every record that supports your income and deductions.
- Stay organized: Keep records in a system that allows quick access during the audit.
- Review your return: Confirm that all reported information aligns with your records.
- Seek professional help: A tax attorney or accountant can guide you through the process and defend your case.
- Be transparent: If there are errors, acknowledge them and provide the supporting documentation needed to correct them.
Frequently Asked Questions About IRS Audits
Is an IRS audit serious?
Yes. An audit means the IRS is formally reviewing your tax return to verify income, deductions, and compliance. If discrepancies are found, you may owe additional tax, penalties, or interest.
How long does an IRS audit take?
Most audits last between three and six months, but the timeline depends on the complexity of your return, how quickly you provide documents, and whether the IRS expands the scope of the audit.
What triggers an IRS audit?
Common triggers include high deductions compared to income, unreported income, mismatched forms (W-2s or 1099s), large charitable contributions, and participation in COVID-era programs such as PPP or EIDL.
Can I handle an IRS audit myself?
You can, but it’s risky. IRS agents are trained to uncover liability, and without proper representation you may provide unnecessary information or miss key defenses. Many business owners hire a tax attorney to guide them through the process.
Who should I call if I get audited by the IRS?
Call a qualified tax attorney. In San Diego and Southern California, Milikowsky Tax Law is trusted by business owners to defend against IRS, EDD, and California Franchise Tax Board audits. Our attorneys communicate directly with auditors, prepare your records, and protect your rights.
What happens if I ignore an IRS audit notice?
If you fail to respond, the IRS can assess taxes, penalties, and interest without your input. In severe cases, they may issue liens, levies, or escalate to collections. Ignoring an audit is never recommended.
Quick Answer: What Should I Do If I Get Audited by the IRS?
If you receive an IRS audit notice, act quickly: you usually have 10 to 30 days to respond. Here’s what to do:
- Read the notice carefully to understand what’s being audited.
- Gather your records: bank statements, receipts, payroll, and other supporting documents.
- Stay organized so you can respond clearly and on time.
- Don’t over-share: only provide what the IRS requests.
- Call a tax attorney to manage communications and protect your rights.
In San Diego and across Southern California, Milikowsky Tax Law has over a decade of experience defending business owners in IRS and state audits. If you’ve been contacted by the IRS, we can help you prepare, respond, and safeguard your business.
Key Takeaway
An IRS audit does not have to derail your business. With preparation, accurate records, and professional guidance, you can navigate the process effectively.
At Milikowsky Tax Law, we have defended business owners against IRS and state audits for more than a decade. If your business has been selected for an audit, we can help you prepare, respond, and protect what you have built.
Interested in learning more? Read on to learn how to respond to an IRS audit.
