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By Stephen Pederson

IRS Audit – What are the Odds?

If You Are a Gambler, Here are the Odds of Not Being Audited by the IRS

 

A picture of an income tax business - what are your odds of being audited?

Tax Time – What Are Your Odds of Being Audited?



 

Ever wonder what the odds of being audited by the IRS?  Well it seems that if you are just a regular working man, they are not that high.  However if you own a business or have a high income or net worth, your odds increase significantly.  The tables below illustrate the proportion of individual, corporate and pass-through returns and their relative rates of audit.

Individual Tax Returns: IRS Audit Rates

 

Type of Return: Individual
# of Returns Filed
# Audited
% Audited
Income <$200,000, no Schedule C or E79,000,000308,0000.40%
Income < $200,000, Sch. C or E < $25,00010,400,000122,0001.20%
Income <$200,000, Sch. C or E > $100,0001,400,00050,0003.50%
Income > $200,000 but < $1,000,0004,400,000140,0003.20%
Income > $1,000,000337,00041,00012.10%
Total95,537,000661,0000.69%

 

Corporate Tax Returns: IRS Audit Rates

 

Type of Return: Corporate
# of Returns Filed
# Audited
% Audited
Assets under $1,000,0001,200,00011,0000.90%
Assets > $1,000,000 but < $10,000,000190,0004,0002.10%
Assets > $10,000,00058,00010,00017.20%
Total2,000,00033,0001.60%

 

Flow Through Tax Returns: IRS Audit Rates

 

Type of Return: Pass-through
# of Returns Filed
# Audited
% Audited
Partnership return3,500,00016,7000.50%
S Corporation return4,400,00022,0000.50%
Total7,900,00038,7000.50%

 

Looking at the numbers, an individual who makes less than $200K per year and does not file a schedule C or E, is facing a 1 in 250 chance of being audited by the IRS.

 

Note:

IRS Tax Return Schedules C and E are used to report income from sole proprietorships, single member   LLCs, rental properties, and interests in trusts, partnerships, and S   corporations on an individual tax return.
For further reading:
Image courtesy of morgueFile.com

 

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