Tax season is much more than just filing your tax return and paying the government. With so many laws changing every year, there's a lot to keep track of—and it can be hard to know what you're entitled to as a taxpayer. That's where tax audit insurance comes in.
Tax Audit Insurance is a type that reimburses a taxpayer for the expenses
Tax audit insurance is a type of insurance that reimburses a taxpayer for the expenses associated with a tax audit. If you've ever been audited, then you know just how expensive it can be--and if you haven't been audited yet, consider yourself lucky!
Tax Audit Insurance offers some great benefits to taxpayers who are worried about potential audits by the:
- You can be reimbursed for many costs associated with your audit. These include legal fees and other expenses related to your audit defense strategy (e.g., expert witnesses).
- Tax Audit Insurance pays even if you were not responsible for the errors reported by in its examination of your return(s). This means that if someone else prepared your taxes or there was something wrong with their work, this type of insurance will still cover your costs (up to certain limits).
Most tax-filing services offer audit defense and audit assistance
Most tax-filing services offer audit defense and audit assistance at an additional cost. If you choose to hire an accountant or tax professional, they will help you prepare for an audit and represent you in court if need be. You may also be able to get audit insurance through your employer; some larger companies offer benefits like this as part of their employee package.
Tax professionals can also help file for extensions on time if needed—something that can take up more time than expected when preparing taxes on a tight deadline!
We can't stress this point enough: check the law site. You should check both the sites, as well as any other site that may have information about tax laws in your city and county. We recommend doing this once every year to ensure you're up-to-date on all changes to tax laws that could impact your business.
A little preparation can go a long way
A little preparation can go a long way, and this is no different. Think of all the times you’ve heard someone say “I didn’t get that notice!” only to learn later that they were being audited because they didn’t provide enough information or file their taxes correctly.
If you find yourself in this situation, it will be much easier for your CPA or tax professional to help if they know exactly what happened with your audit insurance claim. In addition, having all of the necessary documentation prepared ahead of time makes it easier for them—and less stressful for you—to handle the issue
We hope that this article has given you a better understanding of what tax audit insurance is, how it can benefit you and your family, and the steps you need to take to make sure that your rights are protected. We encourage everyone who files their taxes to take advantage of this type of protection so they’re not left footing an unexpected bill because they didn’t plan properly or prepare themselves for possible audits.