Tax Audit

If your tax return is legitimate and you have the data to back up any claims on your return, tax professionals say you can normally handle the situation on your own. If you don’t have the receipts or information, then you may want a professional dealing with the IRS because you could face fines, penalties and interest if you end up owing money.

“If it’s small and not that much income, the audit is often done through the mail,” says Bill Smith, managing director of accounting firm CBIZ MHM.

Office Audit: If the IRS has more questions about your return, then you’ll get a letter in the mail inviting you into an IRS office for the audit. The office audit is more serious, so you may want your tax preparer, accountant or tax attorney to come with you.

“With an office audit the IRS will wrap everything up in one day,” says Foss. “If they need additional records, you’ll have time to supply the missing information.”

Field Audit: This is the most serious type of audit and involves the IRS visiting you at your home or office.

“The reason the field audit is more serious is the IRS auditor will ask to see other things,” says Rosenberg. “They don’t want to limit it to particular items.” While there are much fewer field audits than office or correspondence audits, Rosenberg says he wouldn’t let any client go into a field audit without representation. “It’s the most serious level of audit. If they are coming out to you, they are looking for something.”

Random Audits: IRS agents aren’t looking for anything in particular when they send out random tax payers to review their return, according to tax experts the IRS, but they will review the entire return.

Rosenberg says the IRS conducts these audits to determine what areas are most likely to produce additional taxes. “Unless you have some exposure, you don’t have to hire a professional,” he says of these audits. “[They’re] the the most comprehensive. The IRS looks at everything on the return, even though it’s not...