The Tax Audit – What do you need to know?

It is getting close to the dreaded federal tax filing deadline of April 15, and of course one is about (if not already)  to file his/her annual personal tax return for the 2014 tax year, and of course one is sacred of the thought that the tax return might be audited.  So what are the chances that the IRS would a audit a person’s income tax return?

According to recent IRS statistics, the percentage of all tax returns that has been audited has been consistently been around 1%.  However there are certain patterns that would cause that the IRS might decide audit a tax return.  One guide that the IRS publishes is called “average deductions” statistics, which the IRS computes of what are the average deductions that individuals claimed on their tax returns, based on income level.

Adjusted Gross Income              Medical Expenses  Taxes      Interest     Charitable Contributions

under $15,000                                    $8,675            $3,231       $6,979              $1,501

$15,000 to $30,000                            $7,688           $3,310        $7,190              $2,184

$30,000 to $50,000                            $6,939           $3,932        $7,047              $2,404

$50,000 to $100,000                         $7,988            $6,201        $8,310              $2,990

$100,000 to $200,000                       $9,634          $10,848       $10,399             $3,939

$200,000 to $250,000                     $17,667          $17,556       $13,344            $5,667

$250,000 or more                           $33,521           $49,986       $18,786          $22,001

Sources:  IRS Statistics of Income for 2011 & Wolters Kluwer Tax & Accounting US, 2015

This chart can be used as a guideline as to what the average person has been claiming, it does not mean that if a person is over these averages that the IRS might audit a tax return, but at least for the general public these statistics is out there to see what everyone else has been claiming.

So, if you think that you are sacred that you might be audited, please contact us, and we would be more than happy to review your tax returns, and give us our opinion of whether your tax returns might be audited or not, and even perhaps advise on how prevail on any potential tax audit.