Tax season is upon us, with most Americans putting together the materials they need to file their returns, gathering receipts, and searching for other tax deductions to maximize the amount they get back from the federal government.
But some people go too far in searching for tax advantages. Perhaps they take a deduction that they aren’t eligible for, or claim a few extra dollars on a charitable donation. If the IRS begins to suspect that a tax return isn’t entirely truthful, the filer might be in for an audit.
U.S. News recently spoke with two tax experts about how to avoid an audit, red flags that can prompt a second look from the IRS, and what to do if you’re targeted by the IRS. According to these experts, while an audit is an unpleasant experience, taxpayers do have rights and can take steps to make the experience more palatable.
Who gets audited?
According to Michael Rozbruch, founder and CEO of Tax Resolution Services, few Americans are subject to a second look from the IRS. In fact, audits are one of the few times that having an average salary is an advantage.
“Only about 1.1 percent of people who file a 1040 [the most common tax return] for the 2010 tax year were audited … [or] about 1.5 million,” says Rozbruch. “However, the audit rate is 12.5 percent for people earning $1 million or more in 2010. This is up by 100 percent from 2009 levels! The IRS is aggressively going after this segment of the population.”
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SOURCE: U.S.News & World Report
David Francis
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