10/17/22 Interesting Facts About IRS Audits

10/17/22 Interesting Facts About IRS Audits: Contents

Interesting Facts About IRS Audits

The good news for most Americans is that it’s really, really unlikely that you will ever be audited, and those odds have actually been shrinking recently. In fact, from 2010 to 2019, the audit rate for individual income tax returns dropped to a minuscule 0.25%.  That popped up slightly to 0.41% for fiscal year 2021 — i.e., for every 100,000 tax returns, the IRS audited just 410.

Those with incomes of less than $25,000 saw an audit rate of 1.3% in fiscal year 2021, more than triple that of the national average.

According to the U.S. Government Accountability Office, the audit rate for those making $5 million or more was 2.35% in tax year 2019, the same year that the national average audit rate was just 0.25%.

In fiscal year 2021, IRS audits brought in nearly $41 billion in underpaid taxes.

More than 70% of audits are instead correspondence audits, in which you receive a letter from the IRS. These audits are specific in nature, often asking for additional information regarding certain claims on your return. Other correspondence audits simply request an additional amount due based on IRS calculations.

Although the odds that you will be audited in 2023 and beyond are still extremely low, audits will no doubt be ramping up over the coming years. Legislation passed in 2022 allocates a whopping $80 billion in additional funding for the IRS over the next 10 years, meaning enforcement actions are likely to increase.

Click here to read the article: IRS Audits: 6 Things You Need To Know | GOBankingRates

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