Does My Income Level Affect My Chance of Being Audited?

No matter how careful we are with taxes, the threat of an audit seems to lurk like a bad dream in the recesses of taxpayers minds. But how likely is an audit. Well, here’s the data:

Taxpayers earning less than $200,000 filed more than 136 million returns. Of those, 300,627 were subjected to a “Field” audit (which means they actually had to meet with an auditor. Another 1,076,221 received correspondence requesting verification of some item on their return (referred to as a “Correspondence Audit”). That’s a total of 1.01% with the majority being correspondence audits.

Taxpayers earning more than 200,000 were audited three times as often and those earning more than $1 Million were audited a whopping 12.48% – that’s one in every eight taxpayers!

Audits of international taxpayers (no matter what their income level was) averaged 5.45% with the large majority of those being Field audits.

And most unusual, taxpayers with Adjusted Gross Incomes in the $25,000 to $50,000 range were audited at the lowest rate (0.7%) – even lower than those with incomes below $25,000.

So it’s generally true that the more you make, the more likely you are to be audited. There is not necessarily any rhyme or reason to the IRS strategy for those in the $0 to $200,000 range. Some audits are randomly selected but there’s no question that incomes in the right range are also less likely to be selected.

Need assistance with an audit? Schedule your free consultation by calling (480) 888-7111 or submit a web request here.