When Your Freelance Writing Business Gets Audited – What to Expect
January 10, 2010 by Bob Younce
Filed under Money Matters
Last time, we talked about some of the types of tax audits your freelance writing business could face. Today, I want to cover some of the things that you can
expect at your tax audit, so that you can become mentally prepared for when it happens. Next time, we’ll cover some specific tactics for handling your audit.
Here’s what you can count on at your audit:
There will be stress.
Audits are time consuming and they’re stressful. It feels like you vs. them, only they get to make the rules. You’re going to get asked about events that happened years ago, about things you probably don’t even remember. There will be scary document requests and there will be accusations, if not directly at least by implication.
The Auditor will do her job.
Your auditor’s job is to verify that the numbers you claim on your tax returns are accurate. She’s going to dig, and she’s going to dig deep. She’s going to ask for receipts and to look at your books. She is going to demand proof, and she’s going to want to know how you did each and every calculation. Her job isn’t to provide proof, by the way: her job is to make you do it.
You’re going to lose some records.
It’s nearly inevitable. Whether you’ve moved, had a major life change like a divorce or even just had a major computer failure there are some bits of data that probably don’t exist. The good news is that many of these records can be duplicated and proven by secondary means.
You might disagree with the auditor’s findings.
It’s not unheard of for an IRS agent to get it wrong, at least in the eyes of the taxpayer. The good news is that you have some recourse. After you’ve been through the entire audit process, recognize that it’s not over. You might have lost the first round, but you have outher ways of getting what you want. You just have to follow the right procedures – which we’ll cover in a later post.
Related posts:
You could always try and avoid an audit in the first place. As long as you are doing everything by the books (and that includes using all the wonderful little loopholes that are built in the system) you should never have to worry about an audit.
The best course of action for ANY self-employed individual is to hire an accountant to take care of their taxes for them. This insures that your business side of things remains as pure as the driven snow, and you can remain focused on the most important thing: writing.