No one in Texas hopes to get a notification telling them their tax return is being audited. The very mention of an audit is dreaded by most people. Not only that, but if an audit is not handled properly, it can be extremely stressful and sometimes result in an even bigger tax bill. The last thing people want to hear is that the IRS is increasing the number of audits it performs.
Some people may be displeased to hear that the IRS reported a 34 percent increase in audits between 2010 and 2011 for taxpayers reporting incomes of more than $200,000. While this may worry some in the Forth Worth area, it is important to keep in mind, that the audit rate is still very low.
Last year, less than 4 percent of taxpayers making more than $200,000 or more were audited. So even though the number of audits are increasing, it is still unlikely that you will be selected. Not surprisingly, the IRS is often most concerned with taxpayers who earn substantial income. Last year, one in eight millionaires was audited.
Income isn’t the only trigger for an audit, though. According to a recent article from Forbes, tax credits, deductions and which items are claimed can also cause a return to stick out.
If you have been picked for audit by the IRS, it can be stressful. An audit could result in additional tax, penalty or interest. However, it is important to know that there are ways to challenge or appeal an audit through legal measures.
Source: Forbes, “More IRS Audits Coming Your Way,” Robert W. Wood, Jan. 12, 2012