Tax Audit Lawyers in Northfield
In Northfield, Minnesota, a "tax audit" is a procedure in which the IRS or local tax authorities conduct an investigation of a taxpayer's tax filings, looking at them in more detail than they ordinarily do. Usually, they do this because there is something suspicious in the tax return. State and federal tax authorities also do a certain number of random audits each year, without necessarily suspecting that an individual auditee has done anything wrong.
In Northfield, Minnesota, the process of a tax audit is generally not difficult. If you get a letter saying that you have been chosen for an audit, you should still take it seriously, however. The first thing you need to do is confirm that you are actually being audited, because there are fraudsters who impersonate tax collectors, attempting to squeeze money out of innocent victims. When you receive such a letter, you should use the phone book or Internet to find the contact info for the government agency that the letter claims to be from, and contact them. Do not rely on any contact information provided in the letter, as it may direct you to the scammer, who will simply pretend to be a representative of the IRS.
Once you have made sure that your audit is indeed real, you can do a few things to get ready for it. Most vitally, you should gather all of the documents that the auditor has asked for, as well as any additional documents and evidence that you think might help clear up any confusion about your tax return. You should bring these to the meeting with the auditor, and truthfully (to the best of your knowledge) answer all of the questions that the auditor asks.
Reasons For a Tax Audit in Northfield, Minnesota
There are several reasons why the federal government, or the government of Minnesota may want to audit a taxpayer.
As discussed earlier, an audit might occur due to a taxpayer being randomly selected. If this happens to you, and you have been honest on your tax returns, it's unlikely that you'll have much to worry about.
But, some Northfield, Minnesota tax audits occur for a specific reason. This is usually because the IRS or your local tax authority suspects that you have not reported all of your income on your tax return. For example, suppose that, last year, you bought an expensive new luxury car. But say you only claimed ,000 in total income that year. As you might imagine, the IRS is going to be very interested in finding out where the money for that car came from, and, if you have enough money to buy it, why you aren't paying taxes on that money.
If you claim such a large number of deductions that your tax liability is unusually low, you may well be subject to an audit in Northfield, Minnesota. A deduction is an allowable reduction in your taxable income, requiring you to pay taxes on a smaller portion of your income. Certain business expenses and charitable donations are common sources of tax deductions. However, some people add invalid deductions to their tax returns to reduce their tax burden. If the IRS is suspicious about your deductions, you should make sure you have proper documentation to back them up.
How Can A Northfield, Minnesota Tax Lawyer Help?
If you experience an audit in Northfield, Minnesota, and believe that you have properly reported all of your income on your tax filings, it will probably go fine. And if there is anything wrong with your filings, it was likely the result of an honest mistake, and auditors are generally sensitive to this fact. In such cases, the penalty is usually light. It will probably be little more than a requirement that you pay back taxes and interest.
However, there are some tax audits where the underlying facts are much more complex than a simple misunderstanding. In these cases, a good tax attorney in Northfield, Minnesota may be necessary to ensure that the process is as painless as it can possibly be.