Tax season is just around the corner and the spectre of being audited hangs in the air again. But what are the real chances that your personal tax return will be hit? The odds will probably surprise most of the individual taxpayers out there.
For starters, according to the head of the IRS, John Koskinen, the agency has been impacted by budget cuts that have really restricted its ability to execute audits. In fact, rates for auditing hit the lowest point in a decade last year and will sink even lower this year. Want some numbers?
- Overall, you have a 1-in-119 chance of being chosen.
- If you don’t have any income from a business or renting a home to someone, for example, the chances decrease. The odds are 1-in-330 (!).
It gets better. For the most part the IRS chooses returns for audit randomly and a lot of them are handled via mail, believe it or not. This as opposed to the normal scene people have in their mind of being alone in a dark bare interrogation room with an auditor and a single light bulb overhead.
Now, this isn’t license or encouragement to cheat on your taxes. Rather we offer it just to give you a clearer picture of the reality of the auditing picture for individuals. Always pay your taxes. 🙂