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Will I Get Audited?

Posted by Traci A. Malik Posted on Aug 01 2018

Will I Get Audited?

By Traci A. Malik, CPA/CFF CFE MAcc

 

People always want to know what is a red flag on their return and what are their chances of them getting audited. We have the information from tax year 2015 to try to answer those questions for you.

  1. For the 2015 tax year, IRS processed over 244 million tax returns.
  2. IRS audited nearly 1.2 million of the 2015 tax returns, which is only 0.5% of all returns.

 

Adjusted Gross Income

Percent of 2015 Returns Filed

Percent of Returns Audited in FY

2016

All Returns

100.00%

0.70%

No Adjusted Gross Income

1.70%

3.25%

$1 through $24,999

37.45%

0.80%

$25,000 through $49,999

23.21%

0.49%

$50,000 through $74,999

13.20%

0.41%

$75,000 through $99,999

8.52%

0.52%

$100,000 through $199,999

11.72%

0.62%

$200,000 through $499,999

3.38%

1.01%

$500,000 through $999,999

0.54%

2.06%

$1,000,000 through $4,999,999

0.25%

4.60%

$5,000,000 through $9,999,999

0.02%

10.46%

$10,000,000 or more

0.01%

18.79%

 

Causes for IRS to look at returns:

1.Information reported to IRS for income and not on tax return.

2.Matching issue of unreported alimony.

3.Large itemized or business deductions like charity, home office deduction, car and truck expenses, meals, and travel expenses.

4.Large cash purchases and suspicious activity.

5.Information referrals from angry former spouse, relative, co-worker, neighbor, etc.

 

Schedule C – Sole Proprietors and Single Member LLCs:

Audit risk increases as gross receipts rise

                        Under $25,000                        0.90%

                        Under $100,000                      1.70%

                        Under $200,000                      2.20%

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