What is a tax audit?

A tax audit is an official investigation of a taxpayer’s financial records conducted by a tax authority such as the Internal Revenue Service (IRS) in the United States, Revenue Canada in Canada, or the Washington Department of Revenue in Washington. During an audit, the tax authority may compare tax returns to income records, such as bank statements or payroll records, to verify a taxpayer’s reported income and look for discrepancies. The audit process can also involve an in-depth review of the taxpayer’s financial records, including investments, business expenses, and charitable donations. Taxpayers may be required to provide additional documentation to support their reported income, deductions, and credits. If discrepancies are found, the taxpayer may be asked to pay more taxes or face penalties including fines or criminal charges. It is important for taxpayers to understand their legal rights and to seek the advice of a qualified tax professional before submitting to an audit.

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What is a tax audit?

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