how to respond to irs audit letter sample

Don't Panic: Your First Steps to Responding

• Read the letter carefully, noting the date, the tax year in question, and the specific issues the IRS is raising.
• Note any deadlines mentioned in the letter. Missing these can lead to penalties.

1. Identify the specific income, deductions, or credits the IRS wants to examine.
2. Gather all relevant supporting documents for the tax year under review. This might include:

   Document Type	Purpose
   W-2s and 1099s	Proof of income
   Receipts for deductions	Evidence for expenses claimed
   Bank statements	To verify income and expenses

93 How to Respond to IRS Audit Letter Sample for Unreported Income

• Acknowledge receipt of the letter.
• Provide copies of all W-2s and 1099s.
• Submit bank statements for the tax year.
• Include any documentation for freelance or self-employment income.
• Explain any discrepancies between reported and un reported income.
• If income was from a foreign source, provide relevant tax forms.
• If it was unemployment income, provide statements from the unemployment office.
• If it was gambling winnings, provide W-2Gs or other related documentation.
• If it was interest or dividend income, provide 1099-INT or 1099-DIV forms.
• If it was rental income, provide Schedule E and related receipts.
• If it was capital gains, provide Schedule D and transaction details.
• If it was Social Security benefits, provide SSA-1099.
• If it was pension or annuity income, provide 1099-R.
• If it was royalties, provide relevant agreements and payment records.
• If you received a business loan, provide documentation.
• If you sold a business, provide sale documentation.
• If you received gifts over a certain amount, provide documentation.
• If you received an inheritance, provide documentation.
• If you had foreign bank accounts, ensure FBARs were filed.
• If you are unsure about certain income, state that and request clarification.

93 How to Respond to IRS Audit Letter Sample for Disputed Deductions

• Clearly state which deductions are being disputed.
• Provide detailed receipts for each claimed deduction.
• Submit canceled checks or credit card statements for proof of payment.
• If it's a business expense, explain its direct relation to your business.
• If it's a charitable contribution, provide a dated receipt from the charity.
• If it's a medical expense, ensure it's an eligible medical expense.
• If it's a home office deduction, provide details on square footage and use.
• If it's a mileage deduction, present a mileage log.
• If it's educational expenses, provide proof of enrollment and course completion.
• If it's child care expenses, provide provider information and payment records.
• If it's a casualty or theft loss, provide photos and documentation.
• If it's a business travel expense, provide an itinerary and receipts.
• If it's a moving expense, ensure it meets IRS criteria.
• If it's a qualified tuition payment, provide Form 1098-T.
• If it's a student loan interest deduction, provide Form 1098-E.
• If it's an alimony payment, provide documentation of the divorce decree.
• If it's a self-employment tax deduction, provide Schedule SE.
• If it's a retirement contribution, provide contribution statements.
• If you are claiming a loss on a business, provide financial statements.
• If you have a question about a specific deduction, ask for clarification.

93 How to Respond to IRS Audit Letter Sample for Incorrect Credits

• Identify the specific tax credit in question.
• Provide documentation that supports your eligibility for the credit.
• For education credits, submit Form 1098-T and receipts for tuition.
• For child tax credits, provide Social Security numbers for eligible children.
• For earned income tax credits, show proof of income and number of qualifying children.
• For energy credits, present receipts for qualified improvements.
• For adoption credits, submit adoption paperwork and expenses.
• For dependent care credits, provide provider information and payment records.
• For retirement savings contributions credits, submit contribution statements.
• For health coverage tax credits, provide proof of enrollment.
• For premium tax credits, submit proof of income and enrollment.
• If you are claiming a credit for a business, provide relevant business documentation.
• If you made estimated tax payments, provide proof of those payments.
• If you received a refund from a previous year, explain how it was applied.
• If you are unsure about the requirements for a credit, ask for guidance.
• If the credit was based on a life event, provide documentation for that event.
• If you are appealing a denial of a credit, state that clearly.
• If you made a mistake in claiming a credit, admit the error and provide corrected information.
• If you believe the IRS made an error in disallowing a credit, explain your reasoning.
• If you have supporting documentation for a credit that wasn't originally filed, submit it now.

93 How to Respond to IRS Audit Letter Sample for Business Expenses

• Provide a detailed breakdown of all claimed business expenses.
• Submit invoices and receipts for all expenses.
• Keep a log of mileage for business travel.
• Provide bank statements showing business transactions.
• For employee wages, submit payroll records.
• For rent or mortgage payments, provide lease agreements or mortgage statements.
• For utilities, submit bills and payment confirmations.
• For supplies, provide receipts for purchased items.
• For advertising and marketing, submit invoices and campaign details.
• For professional fees, provide invoices from service providers.
• For insurance premiums, submit policy documents and payment records.
• For repairs and maintenance, provide invoices and descriptions of work.
• For travel expenses, include itineraries and hotel bills.
• For meals and entertainment, ensure they meet IRS deductibility rules.
• For depreciation of assets, provide purchase documentation and depreciation schedules.
• If you operate a home office, provide documentation of its use.
• If you are claiming a net operating loss, provide supporting financial statements.
• If you have changed accounting methods, provide notification of the change.
• If you have any inventory records, present them.
• If you are unsure about the deductibility of an expense, seek professional advice before submitting.

93 How to Respond to IRS Audit Letter Sample for Incorrect Filing Status

• Clearly state your intended filing status.
• Provide documentation that supports your chosen filing status.
• For Married Filing Jointly, provide your spouse's Social Security number.
• For Married Filing Separately, explain the reason for this choice.
• For Head of Household, provide proof of dependents and a qualifying child.
• For Qualifying Widow(er), provide proof of your deceased spouse's death and dependent status.
• If you are unsure about which filing status is best, state that and ask for clarification.
• If you have remarried, provide your new spouse's information.
• If you have divorced, provide divorce decree information.
• If a dependent has turned 19, explain their current status.
• If you have changed residency, explain the implications on your filing status.
• If you are claiming someone as a dependent, provide their Social Security number and proof of support.
• If you believe the IRS incorrectly assigned a filing status, explain why.
• If you have received correspondence about a change in filing status, reference it.
• If you have jointly filed in previous years and now wish to file separately, state that.
• If you are supporting a parent, provide documentation of that support.
• If you have a domestic partner, explain your living arrangements.
• If you are the victim of identity theft, explain how it affected your filing status.
• If you are correcting a previous year's filing status error, state that.
• If you are seeking a refund due to a filing status error, clearly request it.
• If you have made estimated tax payments based on an incorrect status, provide proof.