Surviving an Audit
Even the most honest of taxpayers can be left trembling at the thought of an IRS audit. Let's face it — it's right up there with public speaking. To survive an audit, you've got to arm yourself with information. You should understand what the audit process is all about, why your return was audited, what your rights and responsibilities are, and how you can appeal the findings.
An audit is not an accusation of wrongdoing
An IRS audit is an impartial review of your tax return to determine its accuracy — it's not an accusation of wrongdoing. However, you must demonstrate to the IRS that you reported all of your income and were entitled to any credits, deductions, and exemptions in question.
The IRS generally must complete an audit within three years of the time the tax return is filed, unless tax fraud or a substantial underreporting of income is involved.