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How likely are you to be audited by the IRS?

On Behalf of | Apr 27, 2016 | Tax Audits

The tax deadline has come and gone. Most of us have filed our taxes and crossed the daunting task off of our to-do list.

But for some, the worry about being audited by Uncle Sam looms over our head.

Some argue that such worry is futile. Here’s why.

First, there are less auditors. According to IRS Commissioner John A. Koskinen, the IRS has been slowly losing auditors since 2010. Last year alone, the agency lost 600 employees. Today the total auditor count is at an astonishing low level at 11,600.

Second, there are certain types of people who are more likely to get audited-and many of us don’t fall on the list.

Wealthy individuals with a million or more in income or assets are most likely to be scrutinized by the IRS. According to data from 2014, 16 percent of audited tax returns were on those who reported more than $10 million on their returns. Roughly 3.62 percent of individuals making between $500,000 and $1 million were also audited.

Those who file estate taxes with substantial assets are also likely to be singled out. In 2014, over 21 percent of estate tax returns with disclosed assets of up to $10 million were audited. That number jumped to 27 percent for those who filed assets over that amount.

Given the push to reduce offshore tax evasion, international tax filers are also a red flag to Uncle Sam. In 2014, 4.8 percent of all tax returns audited were from individuals who filed from outside the U.S.

The IRS doesn’t per se stipulate these individuals on record as more likely to be examined, however, there is evidence to conclude that they are at a higher risk.

All of these percentages may seem small, but for contextual references, only 0.53 percent of individuals claiming between $50,000 and $75,000 were audited that same year.

Consumers with questions about IRS extensions, liens, discharging tax debt or any other related tax questions are encouraged to consult with an experienced tax professional.