How do I prove my tax return is correct during an audit?
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Updated July 2023
If you are undergoing an audit and need to substantiate, or prove, the statements you made on your tax return, locate your stash of canceled checks, logs, receipts, bank statements, or any other financial documents related to your tax return. You will be asked to show all financial records that you used to show your taxable income when filing the tax return to prove you did so correctly.
Preparing for an Audit
If you have been selected for an audit, you likely had specific financial issues mentioned in the audit letter. In order to prove that your tax return and records are accurate and that there is a mistake with the IRS information, you must acquire everything necessary to show that you either did not receive the income in question or that the IRS has the wrong amount listed for the income in question. Gather pay stubs, bank statements, check copies, invoices, W2 and 1099 forms, and any other document proving a source of taxable income. Your records should be organized to allow the IRS to easily see what information you used to generate your tax return, and why your tax return was correct.
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Proving Your Tax Return Reflects Your Income
Proving that the taxable income provided on your tax return is the only income you received can be difficult, but is possible with the right documents. If the IRS is suggesting you received income additional to that reported on your tax return, retreive all 12 bank statements from the year in question. If there were any checks that seem close to the amount that the IRS is asking about, request a printed copy from the bank. By showing the IRS that the funds were never deposited into your account, you are proving that you never obtained the benefit from the funds in question.
The best evidence to refute income the IRS thinks you did not report is either the original check you received, original invoice from your work, or a copy of your 1099 form from a business that paid you for any services provided. If the 1099 form has an incorrect amount, contact the person or business from whom it was sent and ask them to fix it so that you can show the IRS the source of their error. Additionally, it helps your case during an audit if the business writes a note on their business stationary stating that the mistake was theirs and that they did not pay you the amount in question.
Getting Legal Help
Proving your tax return is accurate during an audit can be a difficult task, and it may help to contact a tax attorney with your specific questions. A tax attorney can give you advice on what documents are necessary, and how you should obtain them during your audit.
Case Studies: Proving Tax Return Accuracy During Audits
Case Study 1: Proving Income Sources (John’s Case)
John received an audit notice questioning his reported taxable income. To substantiate his tax return, he gathered his pay stubs, bank statements, check copies, invoices, W2 and 1099 forms. These documents helped John demonstrate the sources of his taxable income and why his tax return was correct.
Case Study 2: Disputing Additional Income (Sarah’s Case)
Sarah was challenged by the IRS, claiming she received additional income not reported on her tax return. She collected all 12 bank statements from the relevant year and requested printed copies of checks resembling the amount in question. By proving that these funds were never deposited into her account, Sarah established that she did not benefit from the disputed income.
Case Study 3: Resolving Mistaken 1099 Form (Mark’s Case)
Mark faced an audit due to an incorrect amount reported on his 1099 form. He contacted the person or business responsible for issuing the form and requested a correction. With the revised 1099 form and a note from the business acknowledging their mistake, Mark was able to demonstrate to the IRS that the error was not his and that his tax return accurately reflected his income.
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