Prepare for an IRS audit despite a low risk for getting selected.
In 2018, the most recent year for which the IRS has released information, you have a 0.05% chance of getting audited if you make more than $1 million. In comparison, if you made more than $1 million in 2010, you had a 9.72% chance of getting audited.
It’s not just the wealthy who benefit from less IRS scrutiny. The audit rate for taxpayers who make less than $1 million is significantly lower than the past, sliding from 0.98% in 2010 to 0.15% in 2018.
Despite the chance of your tax return getting selected for an audit drastically declining over the past decade, you should still take preventative measures in case your return is selected for further examination. Here are some suggestions.
- Be accurate. Although this may seem obvious, it is important to accurately report all of your taxable income, deductions, credits, and other figures on your tax return. Be prepared to support the numbers you claim on your return. Unreported income and large deductions are big triggers for the IRS.
- Avoid errors. Whether it’s your income, deductions, or other numbers, errors on your tax return will draw the IRS’s attention. Be careful to double check your return for accuracy and consider waiting until you have all of your financial paperwork before filing your tax return.
- Keep good records. The IRS is more likely to come after you if they notice large deductions or credits. This doesn’t mean you shouldn’t take deductions you deserve. Just make sure you keep the proper documentation to prove your deduction.
- Ask for help. If you find yourself being audited by the IRS, it is perfectly normal to feel overwhelmed or nervous. Please call if you’re facing an audit and need some guidance.