78 IRS Audit Letter Sample 2019: Understanding What to Expect

Receiving a letter from the IRS can be a bit nerve-wracking, and if you're looking for an irs audit letter sample 2019, you've come to the right place. This article will break down what these letters generally look like, why you might receive one, and what steps you can take to address it. Don't worry; we'll go through it together in a way that's easy to understand.

What an IRS Audit Letter Sample 2019 Looks Like and Why It Matters

An irs audit letter sample 2019 serves as the official notification from the Internal Revenue Service that they are reviewing your tax return. It's not an accusation of wrongdoing, but rather a request for more information or clarification on certain items you reported. The importance of understanding this letter and responding promptly cannot be overstated, as ignoring it can lead to more serious consequences. These letters are typically sent by mail and will clearly state that it's from the IRS, along with a case or reference number.

Inside the letter, you'll usually find:

  • Your name and address.
  • The tax year(s) being reviewed.
  • The specific items on your return that the IRS wants to examine.
  • Instructions on what documents you need to provide.
  • A deadline for your response.
  • Contact information for the IRS representative handling your case.

It's crucial to read the letter carefully. Sometimes, it's a simple request for documentation that you can easily provide. Other times, it might indicate a more in-depth review. Here's a quick look at common reasons:

Type of Review What it Means
Correspondence Audit IRS asks for specific documents by mail.
Office Audit You are asked to visit an IRS office with your records.
Field Audit An IRS agent comes to your home or business.

IRS Audit Letter Sample 2019 for Incorrectly Claimed Deductions

  1. Claiming business expenses you didn't actually incur.
  2. Deducting personal expenses as business costs.
  3. Overstating mileage for business travel.
  4. Claiming educational expenses for personal benefit.
  5. Reporting charitable donations you didn't make.
  6. Failing to have proper documentation for itemized deductions.
  7. Claiming dependents who don't qualify.
  8. Exaggerating the value of donated property.
  9. Deducting home office expenses when you don't meet the requirements.
  10. Claiming medical expenses that aren't deductible.
  11. Reporting investment losses that are not legitimate.
  12. Deducting unreimbursed employee expenses that should have been covered by your employer.
  13. Claiming a loss for a business that was never truly in operation.
  14. Failing to report income related to certain deductions.
  15. Misinterpreting the rules for certain types of deductions.
  16. Claiming a deduction for a hobby as if it were a business.
  17. Not properly documenting the cost basis of assets sold.
  18. Claiming a deduction for a dependent who files their own tax return.
  19. Deducting expenses for a vacation that included minimal business activity.
  20. Failing to meet the substantiation requirements for certain expenses.

IRS Audit Letter Sample 2019 for Unreported Income

  1. Not reporting freelance or side hustle income.
  2. Failing to include earnings from a second job.
  3. Omitting income from selling stocks or other investments.
  4. Not reporting rental income from property.
  5. Forgetting to declare gambling winnings.
  6. Failing to report income from a dissolved business.
  7. Not including unemployment benefits as income.
  8. Forgetting to report interest and dividend income.
  9. Not declaring income received as gifts from foreign entities.
  10. Failing to report cash payments received for goods or services.
  11. Omitting income from cryptocurrency transactions.
  12. Not reporting royalties received.
  13. Forgetting to declare income from jury duty.
  14. Failing to report income from settlements or awards.
  15. Not including income from foreign bank accounts.
  16. Omitting income from selling a business.
  17. Forgetting to declare wages from a former employer.
  18. Failing to report income from partnerships or S-corporations.
  19. Not including alimony received as taxable income.
  20. Forgetting to declare income from selling personal items for a profit.

IRS Audit Letter Sample 2019 for Discrepancies with Third-Party Information

  1. Your reported wages don't match the W-2 your employer sent to the IRS.
  2. Your reported interest and dividend income doesn't match the 1099s received by the IRS.
  3. Your reported freelance income doesn't match the 1099-NEC you received.
  4. The IRS received a 1099-K for sales that you didn't report.
  5. Your reported unemployment compensation doesn't match the 1099-G the IRS received.
  6. Your reported capital gains and losses don't match the 1099-B the IRS received.
  7. The IRS has information about a business you own that differs from your tax return.
  8. Your reported Social Security benefits don't match the SSA-1099 the IRS received.
  9. The IRS received a Form 1098-T for tuition that doesn't align with your education credits.
  10. Your reported retirement plan distributions don't match the 1099-R the IRS received.
  11. The IRS received information about a sale of a primary residence that doesn't match your reported gains.
  12. Your reported health savings account (HSA) distributions don't match the 1099-SA the IRS received.
  13. The IRS received information about state tax refunds that you didn't report as income.
  14. Your reported cancellation of debt doesn't match information the IRS received.
  15. The IRS has information about a foreclosure that wasn't reflected on your return.
  16. Your reported contractor payments don't match the 1099-MISC the IRS received.
  17. The IRS received information about a settlement that wasn't reported.
  18. Your reported gambling winnings don't match the W-2G the IRS received.
  19. The IRS has information about a foreign bank account that differs from your return.
  20. Your reported tip income doesn't match what your employer reported.

IRS Audit Letter Sample 2019 for Incorrectly Claimed Credits

  1. Claiming the Child Tax Credit for a child who doesn't meet the requirements.
  2. Overstating the amount of education credits like the American Opportunity Tax Credit.
  3. Failing to meet the income limitations for certain credits.
  4. Claiming the Earned Income Tax Credit when you don't qualify.
  5. Not having the proper documentation for energy credits.
  6. Claiming credits for dependents who are not your dependents.
  7. Overstating the expenses for the Child and Dependent Care Credit.
  8. Failing to report income that reduces your eligibility for certain credits.
  9. Claiming a credit for a business you don't operate.
  10. Not meeting the residency requirements for certain credits.
  11. Claiming credits for investments that were not made.
  12. Failing to report income that affects the phase-out of credits.
  13. Claiming the Lifetime Learning Credit when you only took a few courses.
  14. Not having the required paperwork for the Adoption Tax Credit.
  15. Claiming credits for dependents who have already been claimed by someone else.
  16. Overstating the amount of health insurance premiums paid for the Premium Tax Credit.
  17. Failing to meet the requirements for the Retirement Savings Contributions Credit.
  18. Claiming credits for educational expenses that were not for your own education.
  19. Not having the proper documentation for credits related to home improvements.
  20. Claiming credits for services that were not actually paid for.

IRS Audit Letter Sample 2019 for Complex Tax Situations

  1. Reporting income from foreign sources.
  2. Having significant investments in cryptocurrency.
  3. Operating a business with international transactions.
  4. Engaging in complex business structures like partnerships or LLCs.
  5. Having multiple sources of passive income.
  6. Reporting large capital gains or losses from selling assets.
  7. Receiving substantial inheritances or gifts.
  8. Being involved in legal settlements or judgments.
  9. Having offshore financial accounts.
  10. Engaging in tax shelters or complex tax planning strategies.
  11. Reporting income from a dissolved business or estate.
  12. Having significant business expenses that are difficult to substantiate.
  13. Receiving income from royalties or intellectual property.
  14. Being a partner in a business with complex accounting.
  15. Having significant losses from a business or investment.
  16. Engaging in like-kind exchanges (1031 exchanges).
  17. Receiving income from a foreign pension or annuity.
  18. Having substantial assets in trust funds.
  19. Being involved in mergers or acquisitions.
  20. Operating a business that has been audited in the past.

Receiving an irs audit letter sample 2019 can seem daunting, but remember that it's usually a request for clarification. By understanding what the letter means, carefully gathering the requested documentation, and responding by the deadline, you can navigate the process effectively. Don't hesitate to seek professional help from a tax advisor if you feel overwhelmed or unsure about how to proceed. Taking a proactive approach is always the best strategy when dealing with the IRS.

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