So You're Being Audited

Successful Audit may sound like an oxymoron but it doesn’t have to be. Afterall, the stigma attached to a tax audit is a cue that you must have failed somehow if it’s happening to you. It’s news that’s only said in hushed tones to a close friend over cocktails or coffee, not something you shout from the rooftops. But it doesn’t have to be, and if it happens to you, why not have a successful one.

First, why do tax audits happen, and what can you do if you’re the chosen one? It may occur for many reasons: a math error, failure to report some part of your income, disagreements about the location of your residence or domicile, making a lot of charitable donations that don’t line up with your modest income, claiming too many deductions such as business or home office expenses, and sometimes… you just get audited at random. If it happens, breathe. And then let’s look at what you can do next.

Broad strokes: Collaboration. Aim to have open, transparent, cooperative, and frequent communication with your auditor. Teamwork means a successful outcome for you and your auditor. Be responsive to every request for information, and be as detailed as possible in all data and files you share. Understand the timeline for your audit, when and where to send all information, and how long approximately it will take your auditor to complete their fieldwork. This will reduce the emotion attached to the experience, and make it more concrete, with a finite end point. 

Steps Needed‍

Begin by locating, collecting, and then organizing your financial and related records.* Once you share this info with your auditor, it may prompt requests for further information. Respectfully respond accordingly, and in a timely manner. Before you know it, you will have handed everything off, and the process will be over, and your audit will have successfully reached completion.

Find Reliable Experts

‍While some audits can be straight-forward affairs, others can involve serious money and the process can become complicated. The advice and guidance of a CPA or tax attorney can be immensely valuable to managing this process as swiftly and smoothly as possible. 

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*Pro tip: For sound financial planning (and prevention of future pain), using Chrono lets you effortlessly create a digital paper trail of where you’ve spent your time for tax residency purposes. With one click of a button you can send a report to your CPA, tax attorney or auditor.