Question of the Day (Updated): What income level on tax returns is audited least frequently by the IRS?
Answer: $25,000-$50,000 income level are audited 0.40% of the time or 4 in 1000 tax returns
- Why do you think the percentage of returns that get audited is so low? Explain your reasoning.
- Why do you think that taxpayers are so afraid of being audited? Is their fear warranted?
- Do you think that low audit rates can contribute to more taxpayers "cheating" on their tax returns? Why or why not?
Behind the numbers (IRS):
Despite common misperceptions about IRS examination rates, the reality is that the likelihood of an audit significantly increases as income grows.
Taxpayers with incomes of $10 million and above had substantially higher audit rates than taxpayers in every other income category for each calendar year from 2010 through 2015. Those with incomes above $1 million also had higher exam rates than all other groups earning less.
Tax Year 2015 provides a good historical overview of where IRS compliance priorities are focused. The exam coverage rate of taxpayers with incomes of $10 million or more is 8.16%. The rate for those between $1 million and $10 million is 2.53%. And other income categories are far below that – generally less than 1%.
April 15 is the traditional tax filing deadline. Find out what the new tax deadline in 2021 is here.
About the Author
Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.
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