People who do this more likely to face tax audits

| Jan 31, 2020 | Tax Audits

Most people in Connecticut will never be audited. In 2019, only .45% of all taxpayers, nationally, faced tax audits. The Internal Revenue Service simply lacks the resources to go over every single taxpayer’s tax returns in detail. However, people who do this one thing are more likely to be audited, and that one thing is: make a lot of money.

The average middle-class American only has about a .45% chance of being audited in any given year. Those individuals who bring in between $1 million and $5 million in income have a 2.21% chance of being audited. Those individuals who make over $10 million have a 6.66% chance of facing a full-blown audit.

Why are the wealthy more likely to be subjected to tax audits? These individuals have more financial accounts; they claim to contribute more to charity; and they tend to take different actions than the average Joe in order to reduce their tax liabilities — among other things. The IRS will spend time looking at their tax returns in detail in order to determine if any of their tax-reducing strategies shouldn’t have been taken or were done so improperly.

Of course, income level is not the only red flag when it comes to who will face tax audits. There are several. There is no way to totally avoid being audited, but doing the basics — saving documentation, checking all boxes, making sure all information is included and accurate — can certainly help reduce the odds of the IRS flagging one’s return.

If the IRS comes calling, those in Connecticut who find themselves facing tax audits can turn to legal counsel for assistance in getting through the process. It can be an intimidating thing to go through alone. With the right help in one’s corner, one can get through it as quickly as possible with the best outcome possible.

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