I’m Afraid to Be Audited by the IRS — What Should I Do?

If the thought of an IRS audit keeps you up at night, you’re not alone. Even honest taxpayers feel anxious about the possibility of a government letter arriving in the mail that begins with, “You have been selected for examination…”

While the word “audit” sounds intimidating, the good news is that most IRS audits are routine, preventable, and manageable—especially if you’re prepared. In this guide, we’ll explore what causes audits, how to reduce your chances, what to do if you’re selected, and how to work with a professional to protect yourself.

What Is an IRS Audit?

An IRS audit is a formal review of your tax return and supporting documents to ensure your income, expenses, and deductions were reported accurately.

Audits are conducted in three main ways:

1. Correspondence audit: Handled entirely by mail, usually for small issues or missing documents.

2. Office audit: You’re invited to an IRS office with documentation.

3. Field audit: An IRS agent visits your home or business for an in-depth review (rare).

Audits can go back up to three years, or six years if substantial underreporting is suspected. However, most audits are limited to the most recent return filed.

Why Am I So Afraid of Being Audited?

Many people fear audits for emotional and financial reasons:

• Fear of owing more money

• Worries about penalties or interest

• Anxiety over making a mistake

• Lack of understanding of tax laws

• Fear of dealing with the government

But remember, the IRS doesn’t automatically assume fraud. Most audits are triggered by automated flags and can often be resolved by submitting documents or clarifications.

If you're feeling overwhelmed, the best first step is to consult with a tax resolution expert like Legacy Tax & Resolution Services in Lake Mary, FL for support and a plan of action.

How Likely Am I to Get Audited?

IRS audit rates have decreased dramatically in recent years. According to the IRS Data Book:

• The overall audit rate for individual returns is less than 0.4%

• W-2 employees with no self-employment income are rarely audited

• High-income earners, business owners, and those claiming large deductions face slightly higher risk

So while the fear is understandable, the actual likelihood is low—especially if your return is accurate and complete.

What Triggers an IRS Audit?

The IRS uses a combination of computer algorithms, statistical modeling, and red flags to determine which returns to audit. Common audit triggers include:

• Large charitable donations that seem disproportionate to income

• Unreported income from 1099s, crypto, or bank interest

• High business expenses or losses

• Home office deductions (especially if not well-supported)

• Large Schedule C deductions for self-employed individuals

• Excessive mileage or vehicle expenses

• Claiming dependents who also appear on someone else’s return

• Round numbers everywhere (suggesting estimates, not records)

The key takeaway: If your numbers are accurate and supported by documentation, you likely have nothing to worry about—even if you are selected.

What Happens If I Actually Get Audited?

If you're selected for audit, don’t panic. Here’s what to expect:

1. You’ll receive an IRS letter (never a phone call or email) detailing the issue and what documents are needed.

2. You’ll have time to respond—typically 30 days.

3. You may work with the IRS by mail, in person, or with a representative.

4. If errors are found, the IRS may propose changes and send a bill.

5. You can appeal or negotiate the findings, especially with professional help.

Audits are not accusations—they’re requests for clarification. Staying calm, organized, and respectful makes the process smoother.

What Should I Do Right Now to Protect Myself from an Audit?

Whether you’ve already filed your taxes or are planning next year’s return, here’s how to reduce your audit risk:

• Report all income — even small payments, cash gigs, or interest.

• Avoid round numbers — be precise and exact.

• Keep detailed receipts for deductions, especially charitable giving and business expenses.

• Use a professional if you have complex income sources.

• Double-check dependents and tax credits to avoid duplication.

• File on time and avoid amending unless necessary.

Prevention is always better than reaction. Book a consultation with Legacy Tax & Resolution Services to ensure your return is audit-ready and IRS-compliant.

Should I Be Afraid If I Made a Mistake on My Taxes?

Not necessarily. The IRS understands that honest mistakes happen. In many cases, if an error is identified, the IRS will:

• Send you a notice asking for clarification or correction

• Issue a revised calculation or refund adjustment

• Offer you a chance to amend the return

Serious problems arise when:

• You knowingly omit income

• You fabricate expenses

• You claim credits or dependents falsely

• You ignore IRS letters

Being proactive, cooperative, and honest goes a long way—even if you made an error.

How Do I Respond to an IRS Audit Letter?

If you receive an IRS audit notice:

1. Don’t panic or ignore it

2. Read the notice carefully to see what year and issue is being reviewed

3. Gather all documentation relevant to the items in question

4. Respond before the deadline (usually 30 days)

5. Contact a tax professional to help with your response

You don’t have to go it alone. Professionals like Legacy Tax & Resolution Services can represent you during audits, communicate with the IRS on your behalf, and negotiate if needed.

What Rights Do I Have During an Audit?

The IRS has a Taxpayer Bill of Rights, which includes:

• The right to be informed about what’s happening and why

• The right to quality service

• The right to pay only what you owe

• The right to challenge and appeal IRS decisions

• The right to retain representation

• The right to confidentiality and privacy

You’re not powerless. The audit process is structured and governed by rules that protect your rights and due process.

Can I Get Help If I’m Already Being Audited?

Yes—and you absolutely should. You don’t have to face the IRS alone.

Tax professionals, CPAs, and Enrolled Agents can:

• Review your tax return and identify the audit issue

• Prepare and organize documents for submission

• Communicate directly with the IRS

• Negotiate payment plans or settlements

• Represent you during appeals or Tax Court hearings

If you’re currently under audit or worried you may be, reach out to Legacy Tax & Resolution Services for expert representation and peace of mind.