Chances of Being Audited By the IRS

from www.banks.com

Chances of Being Audited By the IRS
By Chris Bibey November 20th, 2007
Every year, tax filers worry that the IRS is going to single them out for an audit. Are you stressing out over nothing? The fact of the matter is that only a very small percentage of individual tax returns are audited. Generally speaking, the selection process for audits is generated by a computer based model that looks at a set of norms or standards.
When the figures on your tax return differ greatly from the standards that the computer is using, your chances of being audited increase greatly. This is why it is very important to ensure that your numbers are correct no matter what.
Tax returns are grouped together by the IRS, and from there, those that will be audited are chosen. Of course, the IRS does not release information on the specifications and details that they use to break down these groupings. If they did, there would surely be a lot of people trying to “game” the system.
If you report a large amount of deductions or an abnormally low income, there is a good chance that you are going to set off a red flag. In turn, the IRS may contact you looking for an explanation.
Being audited is never fun. But with that being said, just because you are audited does not mean that you are going to get in trouble. Once again, if you are honest and do everything right the first time around, there is nothing to worry about even if the IRS does get in touch.
The IRS estimates that hundreds of billions of dollars have been lost by those who cheat on their taxes. For this reason, Congress has given the IRS a bigger budget for conducting audits.
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