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The likelihood of an IRS audit

On Behalf of | Apr 20, 2016 | Tax Audits

Georgia residents who have already filed or who will be filing their tax returns may wonder whether they are likely to get audited. The odds are not high. In 2015, the IRS audited less than 1 percent of tax payers, and the number is unlikely to increase in 2016. However, there are certain red flags that make an IRS audit more likely, and one of these is earning more than $1 million. Taking a disproportionately large charitable donation is another.

Estate tax returns represent only a very small proportion of tax documents, but of the 35,619 the agency received in 2015, nearly 8 percent of them were audited with larger estates even more likely to be audited. Not reporting all the income that the IRS receives W-2 or 1099 forms for may also result in an audit. Writing off alimony payments may also lead to further investigation because not all alimony payments are deductible.

Claiming losses on rental properties or disproportionately large business deductions may also get the attention of the IRS. Taking an early payment on retirement accounts may as well because those distributions are subject to both a tax and a penalty.

People who find themselves in a tax dispute with the IRS for any reason may want to consult an attorney who has audit defense and similar experience. There may be a number of options available. For example, it might simply be necessary to provide additional documentation. If a dispute is related to the amount of income taxes owed, an attorney may be able to negotiate an offer in compromise or some other arrangement.