TAX AUDITS? There are 2 ways H&R Block can make your life easier, whether or not you're one of our clients, no matter what tax year.

Tax Audits Can Cost You Your Car, Your Home, Your Savings.

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There are 2 ways H&R Block can make your life easier, whether or not you're one of our clients, no matter what tax year.

What is an audit?
An audit is an inspection of an individual's or entity's books and records by the IRS. If you're being audited, the IRS will send you a letter stating which type of tax audit applies to you. There are 3 types of tax audits:

Correspondence Audit — You don't need to physically see an IRS agent for this type of audit. The IRS will request documentation, and you can mail it to them instead of delivering it in person.
Field Audit — If the IRS needs to verify information about your home or business, they may come to see it. Field audits usually involve businesses.
Office Audit — You must be seen in an IRS office and provide requested documentation.

How to Prepare for an IRS Tax Audit
Always provide anything the IRS asks for within the requested amount of time. If you're asked to appear before the IRS, you should bring along your tax return and all of the supporting documentation for the tax year in question, along with anything else requested in your IRS letter. However, don't let the tax auditor keep any of your originals — always provide the auditor with a copy of everything requested.


If you're audited, there are 2 ways H&R Block can make your life easier, whether or not you're one of our clients, no matter what tax year.

1. Audit Assistance is when we help a taxpayer understand the position taken by a taxing authority through an audit request and assist the client in preparing an audit response. This is a free service for current H&R Block Clients. Non-clients pay a fee of $75.*
Product highlights:
Review the tax authority notice or inquiry and explain what it means.
Help research issues involved.
Assist the client in assembling documents and records for the audit.
Explain to the client what to expect during the audit.
Review the audit findings and explaining them to the client.
Explain the appeal process and other options available to the client in the event the client disagrees with the tax authority’s findings.

2. Audit Representation is when we communicate with the taxing authority on a taxpayer’s behalf and represent a taxpayer in an audit proceeding. Only Enrolled Agents (those tax professionals qualified through the procedure outlined in Circular 230) can provide Audit Representation to a Client. This is a free service for H&R Block clients who've selected the Peace of Mind® Extended Service Plan. For H&R Block clients without the Peace of Mind® Extended Service Plan or Worry-free Audit Support, a fee of $120 applies. Non-clients pay a fee of $200.**
Audit representation includes all services from Audit Assistance plus:
Communicating directly with the tax authority on the client’s behalf.
Answering questions for the taxing authority about the preparation of the client’s tax return.
Acting on and asserting arguments on the client’s behalf.
Challenging the tax authority’s position if necessary.
Following up regarding any outstanding issues or further documentation that has been requested.
Researching any issues that may come up during the audit.
Meeting again with the tax authority to resolve any further issues.
Negotiating and settling claims with the tax authority.
Assisting with the appeals process.
What to Keep In Case of an IRS Tax Audit
You should keep your tax returns and any supporting documentation for your tax returns for 7 years. Supporting documentation may include:
home mortgage statements
Forms W-2 and W-2G
Forms of the 1098 and 1099 series and Schedules K-1
receipts for employee business expenses
justification of fair market value (such as H&R Block's DeductionPro) for any items donated to charity
receipts for items donated to charity with value greater than $500
receipts for charitable contributions (including cash contributions made after 2006)
receipts for rental property income
brokerage statements
receipts for qualified education costs
401(k) statements
IRA contribution records
receipts for items sold at a gain
home-office-related receipts
pay stubs
copy of the front and back of the check you used to pay your tax balance due, if applicable
Which tax returns are more likely to get audited?
According to the IRS statistics, individual returns where taxpayers claimed the Earned Income Credit, returns with Schedule C, and returns with Schedule E or Form 2106 are more likely to be examined by the IRS.
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About H&R Block
H&R Block Inc. (NYSE: HRB) is the world’s preeminent tax services provider, having served more than 400 million clients since 1955 and generating annual revenues of $4.1 billion in fiscal year 2008. H&R Block provides income tax return preparation and related services and products via a nationwide network of approximately 13,000 company-owned and franchised offices and through TaxCut® online and software solutions. The company also provides business services through RSM McGladrey. For more information visit our Online Press Center at www.hrblock.com.


Be Aware That Individual Personal Property IItems May Be Taxable. Fortunately, you Got People, Year Round.

KANSAS CITY, Mo. – One man’s junk is another man’s treasure, especially when it comes to garage sales. However, H&R Block (NYSE: HRB) advises taxpayers who might be looking to make a little extra money from a garage sale or online auction to be aware of the tax implications of such sales. For neighborhood tag sales, you probably won’t have to pay taxes. But people who are hosting “online garage sales” on auction sites such as eBay may have a tax bill.
In most cases, the items sold at a garage sale or via an online auction site will generate a non-deductible loss, which means any money you make isn’t taxable. For example, putting a $250 price tag on a couch you bought for $1,000 generates a nondeductible loss of $750. However, if a sale does generate a gain, the proceeds must be reported on an individual’s tax return.
“Although the typical annual garage sales don’t net a profit on most items overall, taxpayers still need to be aware of whether they make a gain on individual items for tax purposes,” said Amy McAnarney, executive director of The Tax Institute at H&R Block. “Most likely, taxpayers who are getting rid of a few items probably won’t have to pay a capital gains tax on the proceeds from the sale of their clothing, furniture, DVDs or other property.”
Online auctions
Taxpayers who host “online garage sales” by buying and selling items on auction sites like eBay may have a tax bill.
“If you’re regularly selling items online and making a profit, you’re responsible for reporting that income to the IRS,” McAnarney said.
Trading or bartering services
Some taxpayers are more likely to trade for services, too. However, a gain on a barter or trade for services also is taxable. Determining the amount of gain may be complicated, and if the barter or trade is connected with a business or involves services, the tax treatment may vary depending on the specific facts and circumstances.
Why pay when you can deduct?
Taxpayers can avoid any confusion around the sale of their clothing and household items by donating that personal property that is in good condition to a non-profit charitable organization for a deduction on their tax return. If you donate noncash items with a total fair market value of more than $500, you must file Form 8283 with your return. You may need a qualified appraisal if you donate an item or a group of items with a value of more than $5,000.
Taxpayers should keep a receipt or written statement from the organization, as well as an itemized description of what property was donated, the values assigned to those items and how the values were calculated.
“The IRS allows you to take a deduction for items donated to certain non-profit charities,” McAnarney said. “Be certain to keep an itemized list of what was donated and the values assigned to each item of personal property.”
Taxpayers who have questions about whether the sale of an item is subject to income tax should contact their tax professional. H&R Block tax offices are open now and can help individuals best prepare for any taxes. Or visit www.hrblock.com for tax tips and other important information.
The Tax Institute, a division of H&R Block, is a national leader in providing unbiased research, analysis and interpretation of federal and state tax laws. Staffed by enrolled agents, CPAs and attorneys, The Tax Institute provides industry expertise for matters related to taxes and the professional tax preparation industry.
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About H&R Block
H&R Block Inc. (NYSE: HRB) is the world’s preeminent tax services provider, having served more than 400 million clients since 1955 and generating annual revenues of $4.1 billion in fiscal year 2008. H&R Block provides income tax return preparation and related services and products via a nationwide network of approximately 13,000 company-owned and franchised offices and through TaxCut® online and software solutions. The company also provides business services through RSM McGladrey. For more information visit our Online Press Center at www.hrblock.com.