Preparing for an Audit: Documents the IRS Often Requests

Why these documents matter

The IRS selects returns for review to verify reported income, deductions, credits, and other tax items. The documents the IRS often requests are the supporting evidence auditors need to confirm those items. Well-prepared records speed the process, reduce the chance of additional assessments, and make appeals easier if needed.

Common documents the IRS often requests

• Income documentation: W‑2s, 1099‑MISC/NEC/1099‑K, 1099‑INT/1099‑DIV, K‑1s, and any pay stubs or third‑party statements showing income. (IRS: Audits Overview: https://www.irs.gov/audits)
• Bank and credit‑card statements: Personal and business accounts that reconcile to deposits and expense claims.
• Receipts and invoices: Originals or clear copies for business expenses, charitable gifts, medical costs, and other itemized deductions.
• Canceled checks or proof of payment: Mortgage interest, charitable donations, tuition, and large purchases.
• Prior tax returns and schedules: Three or more years of returns are commonly requested to show patterns or verify carryovers.
• Contracts and legal documents: Leases, settlement agreements, purchase/sale documents, and partnership agreements.
• Payroll and employment records: Payroll registers, Form 941 filings, and employee tax records for businesses.
• Records that prove basis and cost for property: Closing statements, depreciation schedules, and improvement receipts.

How the IRS asks for records

• Correspondence audits are handled by mail; the IRS lists the specific documents requested and a response deadline (usually 30 days, but check the letter for the exact timeframe).
• Office audits require you to bring or send documents to a local IRS office.
• Field audits involve an on‑site visit where the auditor reviews records in person.

How to assemble an audit packet (practical steps I use in my practice)

1. Start with a concise cover letter: state the tax year, the return you filed, and a table of contents.
2. Provide a one‑page summary for complex items: e.g., a mileage reconciliation or an explanation of a large, one‑time income deposit with supporting bank lines highlighted.
3. Organize by tax year and by line item: label folders (digital or physical) for Income, Deductions, Credits, and Other supporting docs.
4. Send copies, not originals: keep originals unless the IRS specifically requests them.
5. Cross‑reference each document to the exact line on your return (e.g., Schedule C, line 22).
6. Track every submission: date, method (certified mail, e‑file portal), and person receiving it.

Digital audit packages and security

The IRS increasingly accepts digital records. Create a searchable PDF file with bookmarks or an index page. Compress large banks of statements by year and use consistent file names (YYYY‑Type‑Description). For guidance on organizing electronic records, see our guide “Preparing a Digital Audit Package: Organizing Electronic Records for the IRS.” (FinHelp: https://finhelp.io/glossary/preparing-a-digital-audit-package-organizing-electronic-records-for-the-irs/)

Timing and record retention

• The IRS’s general recommendation is to keep records at least three years, but keep records for six years if you underreported gross income by more than 25% and longer for property‑related items. See the IRS recordkeeping guidance for specifics: https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping
• In practice I advise clients to retain tax records and supporting documents for at least six years for more complex situations.

Common pitfalls to avoid

• Sending an unorganized stack of papers without a cover letter or index.
• Waiting until the deadline to begin gathering documents.
• Providing originals when copies suffice.
• Not including a reconciliation or explanation for large or unusual items.

When to engage a professional

If the audit involves complex business transactions, significant adjustments, or potential penalties, engage a CPA, enrolled agent, or tax attorney. If you want someone to represent you directly, a signed Form 2848 (Power of Attorney) lets a practitioner communicate with the IRS on your behalf (IRS Form 2848: https://www.irs.gov/forms-pubs/about-form-2848). Our article “What to Include with Your Response to an IRS Audit Request” covers how to format and present your materials: https://finhelp.io/glossary/what-to-include-with-your-response-to-an-irs-audit-request/

Quick checklist to start today

• Locate W‑2s and 1099s for the years under review.
• Pull bank and credit‑card statements for the relevant periods.
• Gather receipts for deductions claimed (charitable, medical, business).
• Prepare a one‑page narrative for any large or unusual transactions.
• Make digital copies; create an indexed PDF packet.
• Consider hiring a tax professional if more than one tax year or complex business items are involved.

Sources and disclaimer

Sources: IRS — Audits Overview (https://www.irs.gov/audits); IRS — Recordkeeping (https://www.irs.gov/businesses/small-businesses-self-employed/recordkeeping). Internal guides: “Preparing a Digital Audit Package” and “What to Include with Your Response to an IRS Audit Request” on FinHelp.

This article is educational and does not constitute tax or legal advice. For guidance tailored to your situation, consult a qualified tax professional or attorney.