IRS Audit Preparation Made Simple — What to Expect and How to Get Ready
An IRS audit can feel overwhelming, but with proper preparation and clear guidance, the process is often far more manageable than most people expect. At Linda’s Tax Service, our accountants, bookkeepers, and tax professionals help individuals and small businesses throughout Vancouver, WA, and across the country navigate IRS audits with confidence, organization, and realistic expectations.
Today, the majority of IRS audits are conducted through correspondence audits, which are handled by mail or electronically rather than in person. Since 2018, the most common reasons for an audit include missing information, large business expense deductions, and substantial charitable donations. Understanding why the IRS contacts you, and how to prepare the right documents, can greatly reduce stress, avoid penalties, and increase the likelihood of a “no change” outcome.
Below is a practical, step-by-step guide to preparing for an IRS audit and what you can realistically expect.
1. Don’t Ignore the IRS Notice
One of the most common mistakes taxpayers make is ignoring an IRS audit letter. Every notice includes a response deadline, and missing that deadline can lead to:
- Additional penalties
- Interest charges
- Assumptions made against your favor
- Escalation to a more in-depth audit
Your first step is simply to respond on time and acknowledge the audit. This establishes the timeline and opens communication with the assigned auditor.
2. Understand the Type of Audit
After responding to the notice, determine how the IRS will conduct your audit:
- Correspondence (most common)
- Phone call
- In-person meeting
- Document upload through IRS systems
Ask your auditor how they prefer to communicate and how they want documents submitted, by mail, email, or secure upload. This ensures you prepare everything in the correct format from the beginning.
3. Gather All Required Documentation
Proper documentation is the foundation of a successful audit. The IRS will request proof for specific areas, such as:
- Income statements
- Business expenses
- Charitable donations
- Mileage logs
- Real estate or rental property records
Bank statements and credit card statements are not sufficient.
The IRS wants actual receipts, or copies/scans of those receipts, not just summaries of spending.
For businesses, this includes:
- All income documentation (invoices, payment records, 1099s)
- Receipts supporting every deduction taken
- Mileage logs, if applicable
- Proof of charitable donations
- Any worksheets or documentation used to prepare the return
Organize documents clearly, total them where appropriate, and make sure everything is readable. Well-organized information reflects credibility and speeds up the audit process.
4. Know What the IRS Is Looking For
The IRS commonly flags returns when they include:
- Large business losses
- Unusually high mileage deductions
- Large charitable contributions
- Rental properties with no income or significant losses
- Missing income documents
This doesn’t mean you did anything wrong; it just means the IRS needs clarification to ensure everything reported is accurate.
5. Get Professional Help (Highly Recommended)
Even if you plan to meet with the IRS yourself, speaking with a tax professional beforehand is extremely valuable. At Linda’s Tax Service, we:
- Communicate directly with the IRS on behalf of clients
- Help prepare documentation
- Ensure responses are complete and accurate
- Reduce the risk of avoidable penalties
- Guide clients on how to answer IRS questions
If you choose to speak with the IRS personally, remember:
- Be honest
- Only answer the questions asked
- Do not volunteer unnecessary information
- Keep the conversation factual and focused
An audit is simply a review, not an accusation. The IRS is looking for clarity, not confrontation.
6. Realistic Audit Outcomes
Every audit is different, but in our office, results are typically:
- 50% “No Change” Audits
(The IRS accepts the documentation and does not assess any additional tax) - 50% Resulting in Additional Tax
(Usually because receipts or proof cannot be located or are illegible)
Being prepared, organized, and responsive dramatically increases your chances of a favorable outcome.
7. Stay Calm and Communicate
Above all—don’t panic. IRS audits often resolve quickly when taxpayers:
- Respond promptly
- Stay in communication
- Provide clear and complete documentation
Avoiding communication is the fastest route to penalties and complications. Staying involved is the best strategy.
Contact Us
If you’ve received an IRS notice or want help preparing for a potential audit, our experienced team is here to assist. Contact us today for expert tax services.