Top pick: Embroker
- 23 customizable policies
- Instant coverage in under 10 mins
- Personal advisors
Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our content.
Audit defense may help with your business’s documentation during a tax return audit. It may even reduce certain penalties if your business meets the legal requirements. However, you’ll still pay penalties if you can’t support the reason for taking a business expense or deduction.
Audit defense is a type of insurance that covers you if your business receives an IRS audit. It can cover the costs of planning for the audit, preparing any necessary IRS documents and fees for the professional representing you.
Tax audit coverage typically covers the costs involved with preparing for an audit and satisfying IRS requirements. Those costs include:
TurboTax provides audit defense to customers through TaxAudit during your membership period. TurboTax will provide a professional to respond to the IRS, develop a strategy and prepare tax documents if you get audited.
However, you must use receive the notification of an audit during the membership period and notify TaxAudit within 15 days. The membership period starts when TurboTax receives your payment and typically ends within one year. Your protection for the previous year’s taxes extends an extra year if you re-enroll for audit protection.
Buying insurance for tax audits can help if you feel your business submitted a confusing tax return with multiple forms. You might also buy coverage if you want extra peace of mind about an IRS audit.
However, tax defense doesn’t prevent an audit or tax penalties. It simply provides a professional who can help you decipher the paperwork and minimize penalties in some cases. Also, consider that tax preparers hold responsibility for costs and penalties if their services led to your tax return errors.
Typical risks a business could face include:
The cost of audit protection ranges widely based on your business’s size, the type of tax return complexity and the defense service you use. TurboTax audit defense costs around $45 per year for individuals and small businesses.
But with professional law or tax services for businesses, you could pay anywhere from $1,500 to $7,500 for standard audits. Also, costs could range from $5,000 to $15,000 for representing an appeal or tax court case. However, a few firms or software companies include this service free of charge when you use them to prepare your taxes.
Tax audit insurance may not cover several items:
Your business’s audit can go smoothly with a little preparation, whether the audit involves all your records or questioning a specific item. You can prepare in a few steps:
Audit protection can help you navigate the waters of business tax laws when an auditor requires extra proof for your returns. While you might enjoy the extra peace of mind, consider that your tax preparer already has a legal obligation if they make a mistake on your return.
While you’re weighing whether your business could use this coverage, make sure your business is protected for other types of risks it faces every day.
Compare the best small business tax software if you’re self-employed, a freelancer, a partner and more.
Here’s where to get financial help for yourself and your business if you’ve been affected by the storm in February 2021.
Prepare to revamp your asset allocation and explore new investment classes.
From gathering your financial documents to finding a good therapist, we asked the experts for their No. 1 tip for divorcing spouses.
Plus, 2 you can’t.
If you don’t need your money right now, consider investing in an HSA, blue chip stocks and more.
We researched over 20 tax software programs to help you quickly compare the top six.
Grants of up to $10 million for businesses that rely on ticket sales.
Sending a large money transfer to Hong Kong? Learn about laws and required documentation before you transfer.
Maximize your tax savings by having this 1099 expense tracker categorize business purchases for you.
finder.com is an independent comparison platform and information service that aims to provide you with the tools you need to make better decisions. While we are independent, the offers that appear on this site are from companies from which finder.com receives compensation. We may receive compensation from our partners for placement of their products or services. We may also receive compensation if you click on certain links posted on our site. While compensation arrangements may affect the order, position or placement of product information, it doesn't influence our assessment of those products. Please don't interpret the order in which products appear on our Site as any endorsement or recommendation from us. finder.com compares a wide range of products, providers and services but we don't provide information on all available products, providers or services. Please appreciate that there may be other options available to you than the products, providers or services covered by our service.