Approximately 300,000 American taxpayers a year get audited by the IRS. If you are wondering what your chances of getting audited by IRS agents are, you need to examine some important factors.
First, you need to understand what an IRS audit entails. Next, you need to identify some IRS audit triggers. Everyone has a different degree of chance for being audited by the IRS. Let’s find out what yours is.
What Is an IRS Audit?
An IRS audit is when the Internal Revenue Service takes a closer look at your tax records to determine if you are fraudulent. If you are deemed to be fraudulent you may owe money, or face other penalties.
What Can I Expect During an Audit?
The IRS audit process timeline varies with how far back they want to analyze your tax records, how much information you can provide. You can expect to be contacted by an IRS agent and requested to provide your tax records.
You can also expect to answer questions and substantiate any tax claims you have with evidence. If you face an audit or something like this, you should contact a professional for help.
Chances of Getting Audited by IRS Agents
There are a couple of factors that influence your chances of getting audited by IRS agents. Some of them are within your control to fix, while others are not.
Wealth
Your chances of being audited by IRS agents increase with your income level. People in low-income brackets get audited much less often than those in high-income brackets. The IRS does this intentionally.
Write-Offs
If you have a bunch of tax write-offs, the IRS may want to audit you to verify they are accurate. If you are being audited by IRS and no receipts backup your tax write-offs, you could be in trouble.
Unreported Income
If you have a bunch of unreported income and IRS agents catch wind of it somehow, you will probably get audited at some point. To avoid this, report all of your income or avoid spending it the wrong way.
Mistakes
If you made a mistake on your tax return, it could lead to an audit. Filling out tax forms can be confusing, so make sure to check all the boxes the right way to avoid mistakes. Even math errors come with consequences.
Business and Home Office Deductions
The IRS has strict criteria for what consists of business deductions and home office deductions. If you make too many of these you can expect to increase your odds of facing an audit.
Don’t Fall Victim to an Audit
Even though less than 1% of Americans face an audit each year, one can be devastating to you if you fall in the dragnet unprepared. Now that you know your chances of getting audited by IRS agents, you can prepare appropriately.
Make sure to do your taxes the right way. If you face an audit, use the information in this article to guide you through it the right way. For other great news and information, make sure to check out the rest of our blog.
