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IRS Audits

The Internal Revenue Service (IRS) is responsible for ensuring that all American taxpayers accurately report and pay their taxes. One
IRS Audits

The Internal Revenue Service (IRS) is responsible for ensuring that all American taxpayers accurately report and pay their taxes. One way the IRS does this is by conducting audits, during which they review taxpayers’ financial records to ensure that they have accurately reported their income and deductions.

So, how many tax returns does the IRS audit every year? The answer is that it varies depending on a number of factors. Generally, the IRS audits around 1 percent of tax returns filed each year, although that number can vary depending on a variety of factors, including a taxpayer’s income level, industry, and the types of deductions claimed.

While the odds of being audited are relatively low, it’s important to ensure that you are accurately reporting your income and deductions to avoid any potential legal and financial consequences.

The IRS uses a variety of methods to choose which returns to audit, including random selection, computer screening, and referrals from other agencies.

So, who is most likely to be audited?

One group that is often targeted is high earners. Individuals who make over $200,000 a year or who have complex tax returns could be more likely to receive scrutiny. Business owners are also at a higher risk, particularly partnerships and S corporations.

Additionally, individuals who take large deductions or engage in certain types of transactions may trigger an audit. Owning foreign assets, claiming the Earned Income Tax Credit, and failing to report all income are all red flags for the IRS.

While it’s impossible to completely avoid the possibility of an audit, taking certain steps can reduce your chances. Keep accurate records, report all income, and respond promptly if you are contacted by the IRS, and work with a trusted tax professional who can help you avoid costly mistakes. These are all important steps that you can take to ensure that your taxes are filed properly and accurately.

Desert Financial and Tax Services provides financial guidance and tools to aid individuals in becoming debt-free. Contact us today for more information! (928) 315-0040.

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