Nobody likes being audited by the IRS, although the chances of being audited are now actually higher as there are more of them planned.
For those filing who had an income of over $200,000, IRS audits were increased by around 34 percent between 2010 and 2011. Despite this hefty increase, audit rates in general are still low, regardless of income amount.
For those earning over $200,000, almost 4 percent were audited for the 2011 year, and for those earning over a million dollars, audits were increased by 24 percent, with around 12.5 percent of those taxpayers being audited. The Washington Post, The Wall Street Journal and Bloomberg all noticed this and commented on it.
In actuality, you have a two percent chance of being audited, although the Treasury Department still requires tax advisers and preparers to assume that all returns will be audited.
Of course, the chance of being audited affects the advice given, and if a tax preparer tells you that something will probably be accepted, he or she has to assume the return may be audited. Although there is no sure way to avoid being audited, take a look at our 10 ways to audit proof your return.
Various things can trigger an audit, in addition to your actual income, including which items are claimed, your deductions and any tax credits. If you claimed the earned income tax credit (EITC) you generally have more chance of being audited.
A large income alone draws attention, but does not necessarily mean that you will be audited. However, for those of us who are lucky enough to be very wealthy, the IRS actually has a special task frce to handle those tax returns.
More IRS Audits Planned by Steve