Even just hearing the words “tax audit” can put people on edge. Completing your tax return can be complicated enough, and the idea of having it reexamined can make things even worse. But it’s important to know the facts. There are a few common myths that most people have never questioned. Make sure you know what a tax audit is really all about!
Are You Thinking About Tax Audits the Wrong Way?
The IRS has full authority to enforce the tax code. Yet it’s all too easy for taxpayers to forget what that really entails. Let’s clear up some of the tax audit myths.
Myth No. 1 – You’ll only get audited shortly after you file your annual tax return.
Truth be told, the IRS can go back to look at tax returns indefinitely when fraud is suspected. Typically, though, they’ll remain around three years. We can expect audit activity to pick up a couple of months after the filing deadline for the most recent tax return.
In the event of an audit, you’d want to be prepared. One best practice is to keep your supporting documents for a minimum of three years. But copies of your tax returns would ideally be saved forever—just in case.
Myth No. 2 – If you do get audited, the IRS would let you rebuild the necessary records.
Having a good filing system can be a major asset when you’re being audited. Holding on to your tax receipts and proof of deductions will help you defend your case to the IRS. Otherwise, you’ll just have to negotiate with the IRS to set a “reasonable estimate” for what you claimed as deductions. They won’t necessarily wait around for you to find the proper documentation. Not to mention, it might not even be possible to get receipts for transactions that happened years in the past.
Myth No. 3 – Only certain items are eligible for audit by the IRS.
The audit can expand depending on whatever the IRS finds in your return. It won’t exactly be limited to one aspect of your return. The more documentation you have to share, the better. Answer their questions promptly and accurately. Otherwise, you could see the audit balloon into other areas.
Myth No. 4 – Tax audits only happen to people who are wealthy.
Yes, the probability of being audited is higher for higher income levels. But that doesn’t mean you’re exempt from an audit solely based on your tax bracket. Everyone should try to be prepared for an audit. This can be a dangerous myth that just leads people into trouble. Keep accurate records and always make sure you double-check the information on your return.
Myth No. 5 – Getting audited is a nightmare!
While it’s not fun, an audit doesn’t have to mean that your world will start crashing down around you. Just get a team of tax professionals on your side! They can help sort through the requests from the IRS and give you an honest assessment of what’s in store, minimizing your stress and working to wrap up the audit as soon as possible.
If you need help for your tax audit, or if you have any questions about your tax situation or return, please know that we’re here to help! NSO & Company serves clients year-round. Feel free to send us a message so we can schedule a time to talk!
Frequently Asked Questions
Our clients appreciate our fair, transparent pricing — no surprise fees, no confusing invoices. Individual tax returns start at $750, and business returns start at $1,500. If you’d like to talk through your specific situation before committing, a one-hour consultation with a CPA and tax preparer is $250.
Every client’s needs are different, so these starting rates can vary based on the complexity of your return or the scope of services you need. Visit our pricing page for more detail.
If you need accounting, bookkeeping, or tax services, contact us today — we’d love to learn more about your situation and provide pricing tailored to your needs.
We work with a wide variety of individual and business clients across central Indiana. Our clients range from entrepreneurs and small business owners to business professionals, retired individuals, families, and business corporations of all sizes.
Whether you’re just starting a business, managing personal and family finances, planning for retirement, or running an established company, we tailor our accounting, tax, and advisory services to fit where you are and where you’re headed. No two clients are exactly alike, and neither is our approach — we take the time to understand your specific situation so we can offer advice that actually applies to you.
NSO and Company is located in Fishers, Indiana, just off I-69 near the intersection of Lantern Road and 96th Street — an easy, convenient drive from anywhere in the Indianapolis area. Our office is at 8950 Fitness Lane, Suite 100, Fishers, IN 46037.
We’re open Monday through Friday, 8 am – 4 pm, and welcome walk-ins as well as scheduled appointments. If you’d like to speak with someone directly, call us at 317-588-3131.
NSO and Company combines years of experience with personalized service to help individuals and businesses prepare their taxes accurately and on time. We take the time to understand your situation, answer your questions, and look for opportunities to help you maximize your tax savings, while staying compliant and making the process as smooth as possible. Our clients also value our fair pricing and the confidence that comes from working with a trusted local firm.
