Posted on May 31, 2013
Written by Avner Polatsek | @AvnerPolatsek
Tax time is over! Now, along with the relief you feel after filing your taxes, you might be experiencing nervousness that you’ll be audited.
Don’t worry! People and businesses are audited all the time. If you have filed an accurate and honest tax return, you have nothing to be concerned about.
We know that telling someone not to worry doesn’t exactly help the situation, so we have prepared some practical tips if you do happen to find yourself in the middle of a tax audit. In this case, we’re talking about personal tax audits.
If you’re being audited, it could be for a plethora of reasons. Resist the urge to jump to conclusions and allow your CRA Representative to give you all of the details about why you are being contacted. You might be a part of a computer-generated audit and aren’t even suspected of a major offence.
Now that you know the details of your audit, only provide information the CRA is asking for. This isn’t because we are concerned that you’re going to spill the beans on something, but unnecessary information can make an audit go slower.
Auditors are people and spend a good chunk of their time with individuals who aren’t happy to see them. The entire auditing process will be a lot less painful if you are patient and cooperative with your auditor.
If you have well-kept and accurate financial records, a tax audit will be a breeze.
Now’s the perfect time for us to remind you that it is important to keep your tax paperwork organized and easily accessible for 6 years. There are some exceptions to this 6-year rule, so check with us if you are unsure.
If they ask you for a receipt from that charity you gave to last year, you can pull it out of your labeled folder and feel good about your amazing bookkeeping skills.
It’s never a bad idea to contact a tax professional if you are concerned that you don’t have the knowledge to weather a tax audit storm. Accountants are trained in tax law and will be able to assist you with an audit. If you already have an accountant and have filed your tax return with them, make sure to call them before you even contact the CRA.
If you’re a US citizen living in Canada and either the IRS or the CRA audits you, make sure to choose an accountant who has knowledge of both country’s taxes.
Please get in touch with us if you have any questions about your taxes or would like us to guide you through an audit.