The IRS can request an audit up to six years after you file your business tax return. During your audit, you must prove that you filed an accurate tax return. Gather these supporting documents to prepare for acing your audit.
Proof Of Income
Start with Form 1099s, contracts and paid invoices, but then include more— such as deposit slips and cash register tape. Make inventory lists or other types of delivery dates to show that you’ve reported everything.
Organize all the receipts, canceled checks and check registers for purchases you made during the year in question. If you can’t find receipts, write a list of purchases you remember, and include as many details as possible—such as the merchant, date, amount and reason for the purchase.
Find all the bills you received from suppliers, independent contractors and utility companies. Arrange them by tax return category, then double check your math. If your bill totals and the numbers on your tax return don’t match, perform an in-depth search for any missing records.
Bank And Credit Card Statements
Bank and credit card statements usually list the basics about your purchases—the merchant, date and cost. Print these statements from your online account, or ask your bank and credit card companies to provide hard copies as you verify your expenses.
Proof Of Deductions
High deductions, particularly for your home office or business vehicle deductions, may trigger an audit. Find the documents and logs you used to calculate these and other Schedule C deductions. Also, check to see if you have dated photographs of your workspace and equipment, to help prove the amount of space in your home truly devoted to work.
Ideally, you should keep all supporting tax documents for at least six years after you file your tax return. If you need help preparing for an audit, contact us at 720-398-6088. We can walk you through everything you’ll need, from organizing your receipts to what to tell an IRS investigator.