They Pulled Your Return for Review
I think it is safe to say regardless how good of a record keeper you are, when your tax return is pulled for an audit it is scary and intimidating.
There are different kinds of audits. There is something called a correspondence audit and there is an actual audit. When your return has been pulled for a correspondence audit, you will receive a letter disallowing expenses or deductions claimed on your return and given a deadline to substantiate your expenses and/or deductions claimed. If a taxpayer doesn’t respond by the deadline, the expense or deduction that was being questioned will be disallowed and the additional assessment will be made. If the individual responds timely with the applicable documents it generally works in the taxpayers favor. The correspondence audit is a check and balance for the IRS. Now that everything is done electronically, when your return is being processed, if the system doesn’t reconcile the expense or deduction claimed, it can flag your return for review. As long as the deductions are legitimate and you have documentation, you will be able to prevent the assessment of additional tax. Read more »