One of the facts about filing taxes is that you may be audited by the Internal Revenue Service, also known as the IRS. This can cause much consternation and even fear in the taxpayer. Audits are no small matter; the IRS has vast institutional power and tremendous resources to enable it to collect taxes they believe are still owed. Your best bet is to seek out professional tax planning Columbia MD.
Audit Statistics By the IRS’s Own Accounting
You may have heard horror stories from third-party sources about taxpayer interaction with the IRS audit division. Why not inform yourself about the actual facts as publicly revealed on the IRS’s own website. Here’s what you need to know:
- Eight Years of Results. During the period of 2010 through 2018, the IRS scrutinied 0.6% of individually filed returns and 0.97% of business and corporate filings.
- 2019 Data. In the tax year 2019, the IRS audited over 771,000 federal tax returns, resulting in an additional $17.3 billion in.recommended additional tax due.
Compliance actions were often initiated by the IRS because of these two common irregularities:
- Math errors in the return.
- Underreporting of income.
In addition, some audits were initiated by the random sampling method.
Best Ways To Prevent an Audit
In actuality, the statistics show that your odds of an audit are low. But they still occur, especially when the return contains certain “red flags“. Perhaps the two most important things anyone can do to prevent an audit are, to be honest about your income and to check your return for math errors. In addition, being organized as the year progresses is also highly recommended. Of course, since the tax code is incredibly complex and every taxpayer’s situation is different, working with a competent tax planner throughout the year will make you even less likely to face an audit.