What does it mean to be audited?

Art Auerbach: My name is Art Auerbach. I am Tax Director with Goodman & Company and the next year is basically what happens to your return after I send it to the government.

Host: What does it mean to be audited?

Art Auerbach: To be audited it means that the government is questioning what you have put on your tax return. It does not mean that you have done anything wrong. You could be randomly selected for an exam that is of all of the people filed, they pick you out and you are going to be part of the statistical base that's going to determine who else gets ordered and is basically what it amounts to. So, what happens when your return gets filed? It goes to an IRS campus, the return is processed through the system and when it is processed your return is compared to an IRS model based on the area where you live. The income that you have reported and the deductions that you have taken. Your return is the sign of score. The higher the score determines whether or not you are going to be picked for exam. The lower you score means, you are closer to the model that they were expecting to see from where you live. Now, if you get picked for audit then you have to substantiate whatever it is that the government is asking you to do. So, it substantiate your income, substantiate your deductions and that means have a piece of paper that proves what you wrote on the return. So we will go back to what I did. All the away back at the introductory model. Remember your tax return is non fiction.