What should freelancers know about tax audits?

What should freelancers know about tax audits?

Freelancers should be aware that tax audits can happen if there are discrepancies in their reported income or expenses. It's crucial to keep accurate records.

How can I prepare for a tax audit?

To prepare, gather all relevant documents like invoices, receipts, and bank statements. Organize them by year and category.

What are common reasons freelancers get audited?

Common reasons include underreporting income, claiming excessive deductions, or inconsistent information between tax returns and reported income.

Do I need a tax professional for an audit?

While it's not mandatory, having a tax professional can help navigate the audit process and ensure compliance with tax laws.

What happens during a tax audit?

During an audit, the IRS or tax authority reviews your financial records to verify your tax return. They may ask for additional documentation.