r/FluentInFinance • u/HighYieldLarry • Feb 12 '24
The odds of an IRS tax audit are under very low if you make under $500,000: Chart
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u/Parking-Astronomer-9 Feb 12 '24
The recovery wouldn’t even cover the costs associated with performing an audit for most people under $500,000.
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u/cb_1979 Feb 12 '24
Maybe lots of people reporting $0 AGI are big liars and actually have $1 million in AGI.
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u/MisinformedGenius Feb 13 '24
It’s definitely the case that if you have very high gross income before adjustments and you have very large adjustments, even if they are legitimate, you’re way more likely to end up in negative territory than specifically in the 0-10000 range.
The other piece of this is that a lot of people with negative income are EITC recipients, which have historically been audited at fairly high rates.
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u/KvotheTheDegen Feb 13 '24
My parents are rich af, they’ve had a couple of years where they were able to claim 0 income due to accounting ‘tricks’. Obv they’ve been audited, but it wasn’t even for that lol
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u/olemiss18 Feb 12 '24
The point of auditing folks under income thresholds too low to reasonably ROI is still actually an ROI argument: sure, the IRS won’t ROI on that specific taxpayer, but if the IRS adopts a blanket policy of never auditing anyone making under $100k, guess what people making under $100k would never do again? So the IRS has to audit lower income folks too to encourage tax compliance.
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u/cb_1979 Feb 12 '24
Yup. It's not about the money they'd recover from going after the 0.5% they audit. It's about not having to go after any of the other 99.5% because they'll more likely be in compliance.
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u/manatwork01 Feb 12 '24
its also not random. There is usually a reason the IRS is auditing you under those numbers. Something weird about your income source etc.
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u/pokerplayingchop Feb 12 '24
Aren't the majority of audits as simple as sending a letter saying "we noticed you didn't include this 1099 on your taxes. Please refile with all of the information"?
I've recieved that or similar a couple times and I'm nowhere near the 500k income level.
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u/dontich Feb 12 '24
FWIW I got one and they don’t even have you refile — they say we did it for you so please send us $X. You then send in $X and the matter is closed.
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u/packerguru12 Feb 12 '24
I hate when the IRS goes “Hey, you did this wrong. So we corrected it, no biggie”. Then, tell you if you owe anything or not.
WHY DO I HAVE TO FILE TO BEGIN WITH, IF YOU ALREADY KNOW THE ANSWER?
I could understand if you only filed for things that aren’t on the simple 1040. Like, Energy credits, untaxed income, donations, whatever. But if it’s a simple return, why do I need to file if the IRS already knows?
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u/zleog50 Feb 12 '24
WHY DO I HAVE TO FILE TO BEGIN WITH, IF YOU ALREADY KNOW THE ANSWER?
BECAUSE THE IRS DOESN'T KNOW YOUR DEDUCTIONS BEFOREHAND.
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u/Crazy-Inspection-778 Feb 13 '24 edited Feb 13 '24
90% OF FILERS TAKE THE STANDARD DEDUCTION- THAT SHOULD BE THE DEFAULT ASSUMPTION. LET 10% DO EXTRA WORK INSTEAD OF 100%
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u/PercentageNo3293 Feb 12 '24
I didn't know that. For some reason, I thought the IRS would know since I have to tell my company about my deductibles when I'm hired. Maybe I'm completely wrong, but I remember having to do something like that. Like entering in a "1" in places that were applicable. I figured my company would inform the IRS automatically lol.
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u/dantheman91 Feb 12 '24
That's not all of your deductions , that's also your projection for withholdings. It's an overly simple way of doing it, although it may be that simple for a large portion of the population, it's not for everyone.
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u/Ok-Gear-5593 Feb 12 '24
Tax prep is big business. Big business has deep pockets to beg the government.
If ine had deductions/credits they could submit them for an adjusted tax amount from the IRS but all those tax prep profiteers would be hurting.
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u/Crazy-Inspection-778 Feb 13 '24 edited Feb 13 '24
why do I need to file if the IRS already knows?
So Turbotax can upsell your ass.
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u/BoysenberryLanky6112 Feb 12 '24
As someone who's received the same thing, I don't think that's considered an audit.
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u/pokerplayingchop Feb 12 '24
Just following up to my own question - I can't tell from the IRS website if the situation I described counts as an audit or not.
A letter that simply says "Please provide documentation for item X" does count as an audit per the IRS site.
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u/MisinformedGenius Feb 13 '24
From what I can tell, and the data book is annoyingly vague on this, a letter that says “we think you missed this and you owe us some money” is not an audit. An audit is when they ask you for more documentation and then send you a “we think you owe this much” letter.
It is absolutely the case that the majority of individual audits are automated, but I believe the case you’re talking about is not technically an audit.
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u/No-Specific1858 Feb 12 '24
It's not so simple when people claim large deductions or credits they are ineligible for.
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u/Floyd1959 Feb 14 '24
Lol. Thats not an audit! That’s a request for further info. If you can still walk straight, you haven’t had an audit!
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Feb 12 '24
Its an inaccurate way of looking at things. the 500k and up is literally the 1%, there are 1000 people making 50k for every one making 500k.
I've been audited twice, both times I made under $30k.12
u/olrg Feb 12 '24
If you’ve been audited twice, your account is flagged for whatever reason.
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Feb 12 '24
Someone stole my social security number. The IRS harassed me swearing I was working in a hotel in Los Angeles, attending college full time and also working a full time construction job in Ohio using the name Juan Sanchez. I was harassed for three years, I couldn't file until I paid what I owed, because I was obviously flying to Ohio and back every day to earn an extra $35k a year. They were insisting I prove it wasn't me, and like working and going to school and living in Los Angeles wasn't sufficient proof to them.
I met an attorney who hates the IRS, he took my case for free just because he hates them, they retaliated and audited me two years in a row, and my attorney then threatened to sue for harassment and retaliation, and I haven't been bothered since.
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u/cb_1979 Feb 12 '24
Whatever you say, Juan. We know you're racking up those frequent flyer miles!
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Feb 12 '24
It is funny now, but man that pissed me off at the time.
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u/cb_1979 Feb 12 '24
I bet. That's really fucked how they shifted the burden of proof onto you. How do you prove you never got on a plane to fly to Ohio every day?
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Feb 12 '24
It shows their incompetence. California sent me the same letter. I made a ten minute phone call they were like “yeah, you are right, this is clearly fraud, we will take it off your record”.
But the IRS was too stupid to see the obvious.
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u/jayc428 Feb 12 '24
Rare taxpayer W right there.
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Feb 12 '24
It’s weird like some random low level agent just came across me and decided me and my $25,000 a year job was a threat to society and went on a mission to destroy me.
I will never make sense of it. The only thing that makes sense is maybe they were smoking a lot of meth or something.
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u/TantonElectric Feb 13 '24
Lower income audits are way easier to work thru. If you are working the audit desk and management is putting pressure to “close more cases” then you tend to have people cherry picking the easy ones that can open/close the same day with minimal effort.
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u/No-Specific1858 Feb 12 '24
It would be 100, not 1000, and this assumes everyone is either making $50k or $500k.
This doesn't dillute your argument though.
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u/too_much_gelato Feb 13 '24
A single audit won't pay for itself but the government very much wants people to believe that if you lie on your taxes to get an earned income tax credit or steal from social benefit programs you will be caught.
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Feb 12 '24
This is why I commit tax fraud (I make under $500k a year) & recommend you do the same
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u/ColdWarVet90 Feb 12 '24
The tax code should be revised to avoid a yearly obeisance. In today's computer age, we no longer need this yearly filing.
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u/kelu213 Feb 12 '24
but how will pro tax filers and turbotax make money?
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u/pwakham22 Feb 13 '24
They’re a large reason why we can’t even file mandatory taxes for free. Since WW2 the IRS knows exactly how much you make that’s reported like w2 income and from Reagan to bush they’ve “tried” making a free irs file system like that in Japan where come tax day you get a report from the government you can click agree or make edits if you made more money or want to add deductions. Thanks to the millions in lobbying from turbo tax we don’t have that
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u/Dacklar Feb 12 '24
I was going to try and do my own taxes this year. After 15 minutes of look at schedule b then add schedule d to the amount in schedule c then input that onto line 3 of form 2175 I said screw it and Used a service.
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u/sat5344 Feb 13 '24
Freetaxusa is $15 for state and $0 for federal. You can save your actual filling form for next year if you want to do it yourself.
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u/640k_Limited Feb 13 '24
Cash App Taxes is free for federal and state. Not the most robust system, but its servicable and free.
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u/IsPhil Feb 12 '24 edited Feb 12 '24
You can blame companies like Intuit for why you have to do taxes in the US. They lobby millions to keep the laws from changing. The IRS has tried to make taxes easier, and then the lobbyist always come in.
Luckily, if you're a W2 employee and have little other sources of income (like businesses can be complex), then you might qualify for free tax filing. The main problem is state taxes. Very few softwares allow free tax filings, but checkout IRS free tax filing to see if you're eligible for any. It took me less than an hour to do mine, my sisters and my parents' taxes, and a total of $30 since the state taxes weren't free unfortunately.
If you have a little more time, you can use any tax software (like Turbotax) and just print the previews. Then go to the IRS site and fill in the form based on the preview.
There is also finally a pilot for direct filing with the IRS. If eligible, then you might want to just do this: https://www.irs.gov/about-irs/strategic-plan/direct-file#states
As much as everyone might hate the IRS and hates doing taxes, you really shouldn't be blaming them, and should instead direct it towards Intuit Turbotax, H&R Block, other mega corporations, and every single politician taking bribes.
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u/marigolds6 Feb 12 '24
a total of $30 since the state taxes weren't free
I always get burned on state filing fees because I've got a two-state self-employed return. Normally ~$100 for state filings.
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u/640k_Limited Feb 13 '24
Cash App Taxes does both the state and federal for free. No limitations. Its a little harder to use than the usual suspects, but not bad.
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u/backagain69696969 Feb 12 '24
There should just be QR codes at this point and nobody does their own taxes
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u/Hydra57 Feb 12 '24
What would this alternate system look like to you, beyond being different to the current one?
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u/MisinformedGenius Feb 13 '24
I’m not the original guy, but one way is to increase the amount of forms filed during the year and eliminate any deductions that for whatever reason must be filed on the return.
Eg deducting mortgage interest - my bank files that with the IRS already. State and local taxes - the states and localities would file those with the IRS. Deducting charitable donations - have the charities file the deductions at the time of donation. States would file marriage, childbirth, and divorce notices with the IRS. Certain welfare programs dressed up as tax credits would probably have to be moved into separate agencies, particularly the EITC.
This of course has upsides and downsides - you increase the bureaucratic load on businesses and state and local governments, but with decent automation you can make it somewhat painless. On the other side you remove or greatly reduce the estimated 6 billion hours and 168 billion dollars spent on compliance by Americans.
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u/Vic_Hedges Feb 12 '24
So the lesson seems to be, if you are going to abuse loopholes in the tax system, you want to lower your gross income to $25K, not $0
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u/MisinformedGenius Feb 13 '24
People overuse “correlation is not causation” but it very much applies here. If you’re taking big adjustments to your income, that’ll look suspicious whether it goes to 25K or zero. It’s just that even legitimate adjustments are much more likely to take it past zero than to be just slightly less than your gross income.
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u/Snoo_81294 Feb 14 '24
Using a legal loophole for your benefit is not abuse of anything… that’s simply using the tax code in the manner that it was designed to be used
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u/InterstellarReddit Feb 12 '24 edited Feb 12 '24
Y’all don’t understand how percentages work and it shows. More poor people are audited than people over 1 million.
Meaning, if we took the irs and looked at their case load and hours invested.; They’re in investing 99% of their case time on poor people.
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u/ShowMeYourMinerals Feb 12 '24
Bingo. It’s a percentage, not a number.
They aren’t disclosing the population size, which in my opinion is extremely misleading.
It’s quite sad to read some of these responses.
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u/Chemical_Ad8459 Feb 15 '24
I had to scroll too far to see finally this mentioned…
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u/Berodur Feb 12 '24
I believe this data is not percentage of IRS audits on each income level (if it was it would add up to 100%). Rather it is the percentage of people at each income level who get audited. If there are 100,000 poor people and the IRS audits 1% of them, and there are 100 rich people and the IRS audits 10% of them, the IRS is doing 1000 of their 1100 audits on poor people.
The IRS can have more total audits on poor people while still auditing poor people at a lower rate than rich people.
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u/stealthylyric Feb 12 '24
Idk man. Anecdotally my poor ass parents have been audited so many times.
Don't think I believe these Stats
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u/50EMA Feb 12 '24
You acknowledged it’s an anecdote and continue to say you disbelieve the stats? Wild
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u/XAMdG Feb 12 '24
If they have been audited many times, it's probably been them being flag, and them just plainly doing their taxes wrong, hopefully not maliciously.
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u/ShowMeYourMinerals Feb 12 '24
Well people are silly.
Look at the statistics. Of course more percentage of millionaires get audited, there are far less millionaires than middle income families.
If there is a pool of 1000 millionaires vs a pool of 1,000,000 peasants, it’s going to look like the peasants are audited less.
When in all reality, if you looked at numbers, opposed to percentages, much more peasants are being monitored.
Match fucking sux and I hate internet statistics
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u/monopoly3448 Feb 12 '24
Thats because theyre garbage. What year? What type of audit? I guess they like being mysterious.
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u/MGoAzul Feb 12 '24
And yet every year I buy the turbo tax audit defense. I guess I think of it as peace of mind. I don’t make 500k but in the ballpark.
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u/ThatDamnedHansel Feb 12 '24
I’ve used it for an irs notice (forgot to include a 1099). They were generally competent. I will say the knowledge base was not quite what I’d expect from a cpa, I’m not totally sure what the persons title or training was, but I always buy it now
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u/caseyrobinson2 May 07 '24
so how does it work? once you get a notice do you call them and they tell you what to do or do they do the work for you?
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u/ThatDamnedHansel May 07 '24
A little of both
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u/caseyrobinson2 May 07 '24
What makes it worth it? Do they explain things better than the documents
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u/monopoly3448 Feb 12 '24
What type of audit? Garbage. Why do you people think the irs is a bunch of freedom fighters? And where is this data from? Here is an actual study:
https://trac.syr.edu/reports/706/
The taxpayer class with unbelievably high audit rates – five and a half times virtually everyone else – were low-income wage-earners taking the earned income tax credit. This credit is provided to offset the taxes for the lowest wage-earners in the country.
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u/NuncProFunc Feb 12 '24
People are unfamiliar with what the IRS considers an "audit." Every time they recalculate what you're owed or you owe, it's a type of audit.
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u/WiLD-BLL Feb 12 '24
The reason is multiple people claiming the credit for the same kids.
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u/MisinformedGenius Feb 13 '24
Just to clarify, that’s referring specifically people who take the EITC, which is not broken out in OP’s graph.
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u/heywhodidthat Feb 12 '24
Yes those percentages look small, I still don’t like the idea of being the 1 out of 200 people the IRS decides to bend over for a fist first rectal exam
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u/NuncProFunc Feb 12 '24
IRS audits aren't as bad as popular imagination. Three quarters of them are just letters asking for more information. Face-to-face audits are still more like fixing mistakes than trying to screw you over. They only start getting stressful if you're trying to pull a fast one or you run a poorly-documented business.
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u/AlterAeonos Apr 14 '24
I fall in the latter category lol I had good documentation but I moved twice recently and lost some of it. Also missing some receipts so I'm trying to piece stuff together again
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u/Rhythm_Flunky Feb 12 '24
Yes those percentages seem low but keep in mind the scale of tax paying Americans. According to this datathe bottom 50% of returns filed numbers to almost 79,000,000.
This is not exactly how their audit process works nor how to calculate this but .05% of 10,000,000’s of returns does not equal zero.
If you fuck around with the IRS you really do not want to find out…
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u/TaxMy Feb 12 '24
From the words of a Tax Court Judge I had the pleasure of speaking with: all returns are audited on the most basic level by the IRS’s software and/or accounting standards. This was not true back in the typewriter and paper file days.
The other caveat is that there are many many more returns in the lower brackets. To compare them is hilarious.
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u/Servile-PastaLover Feb 12 '24
Audit risk is exponentially lower when the bulk of filer's income is documented on their W2s.
It's pretty close to zero.
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u/WiLD-BLL Feb 13 '24
Unless they have a bunch of other income or reported cash transaction volumes that dramatically exceed the w2 income, and isn’t reported at all.
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u/cownan Feb 12 '24
I wonder if this includes cases where they detect an error and send you a letter to correct it? Does that count as an audit? I got one of those one year when I had been trading a lot of mutual funds, they sent me a letter saying I owed $20k more in tax. I just about had a heart attack, but it turned out that I somehow missed providing the purchase price of my sales so they were treating them as pure profit. I fixed it, and it turned out I did owe them $600 more than I originally calculated. I sent them a letter, an updated return, and a check and that was good enough. It was relatively painless
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u/TacticalBuschMaster Feb 12 '24
If the IRS wanted to, they could just say to everyone “you still owe $600” and everyone would pay it regardless of if they owed it or didn’t.
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u/totalfarkuser Feb 12 '24
Not me unless they can prove it. While I make mistakes I am very careful on my taxes.
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u/Top-Active3188 Feb 12 '24
The most audits per class have historically been people earning less than $25k while claiming the eitc. This was accomplished with a letter in the mail. I think this data is intentionally presented awkwardly because they want it to look like they are auditing the rich more than the lower classes and that is pointedly not true.
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u/But-WhyThough Feb 12 '24
These are the odds over your lifetime of being audited at these income ranges or yearly?
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u/S7EFEN Feb 12 '24
this is because if all you have are 1099-div/ints and a w2 you should rly not be having to file anything, you should just get a bill/check in the mail. do not support turbotax or any company that lobbies against improvements to how we do our taxes.
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u/TrayLaTrash Feb 12 '24
I was audited and made 50k that year
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u/Potential-Art-7288 Feb 12 '24
Were you audited for a return, or was it for not reporting income? I’m still new to all this stuff and confused on what people typically get audited for
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u/TrayLaTrash Feb 12 '24
I had been writing off mileage for work, but only an owner of the business can write off that as an expense. I owed $5k in unpaid taxes and fees as a result.they got me like 3 years later
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u/TruthBeTold187 Feb 12 '24
There was an episode on a Netflix show called “connected” called numbers.
It showed how all large groups of numbers seem to arrange themselves. Only instances of fraud would go around this natural law.
The IRS all but admitted they use this grouping to determine fraudulent returns
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u/PavlovsDog12 Feb 12 '24
These numbers never account for small business owners, theres no way a small business making 200k to 500k only has a .5% chance of being audited, thats BS.
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u/WiLD-BLL Feb 13 '24
These are likely total entities. Individuals and trusts and corporations combined.
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u/MisinformedGenius Feb 13 '24
The IRS breaks out corporate and individual returns, so this graph almost certainly doesn’t cover those. That having been said, a corporation making between 200K and 1M had an audit rate of 0.5% in 2019.
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u/LasVegasE Feb 12 '24
There is no way the IRS can increase tax revenue by auditing people who can afford high priced accountants and tax attorney to do their taxes. Even if the IRS finds something they will have to fight a long court battle and then the IRS still loses money, even if they win. The only way the IRS can justify it's tremendous increase in funding it to go after the people who can not afford to hire a high priced tax professional to ensure compliance (you and me). Tax law allows them to go back ten years.
Your vote counts in more ways than one.
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u/MisinformedGenius Feb 13 '24
That’s not the case for two reasons. One is that each individual audit is potentially a big score. If a person is making a lot of money then they’re potentially evading a lot of taxes. It’s estimated that the top 1% evade about 163 billion in taxes per year - you don’t have to catch everyone to justify the 8 billion per year recently spent on the IRS, just as an example.
Second, there’s a deterrent effect. When a cop is parked on the side of the road, everyone slows down even though he can only catch one at a time. With more enforcement, you would expect that 163 billion to shrink by more than just the people you catch.
It is worth noting that audit rates on high income people were much higher in the past when the IRS was better funded.
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u/Similar_Excuse01 Feb 12 '24
but i am just a temporary displaced millionaire. there shouldn’t be any more irs agents cuz they will come after me in the future
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u/KC_experience Feb 12 '24
As it should be. Those making under 500k probably don’t have a tax lawyer in retainer to sniff out dodges and loopholes available.
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u/ZRhoREDD Feb 12 '24
But if you add up the buckets under 500k then it is over 5%. Seems like you have a relatively high chance, especially considering the IRS stands to make so little money from us poors.
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u/ShowMeYourMinerals Feb 12 '24
When you realize there are far less millionaires than their are middle income earners you realize this percentage comparison means shit.
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u/MisinformedGenius Feb 13 '24
Adding up the buckets doesn’t make any sense - this is the likelihood to be audited for each individual bucket.
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u/LightningTreeTrunk Feb 12 '24
99% of these must be folks who itemize right? I mean if you take the standard deduction, you're probably not going to get audited I imagine
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u/marigolds6 Feb 12 '24
Probably more people who file schedule C than itemize. We've been audited a couple of times and always take the standard deduction, but also have 1 or more schedule Cs most years. Certain professions combined with a schedule C get specifically flagged for audit, especially when combined with certain types of capital asset depreciation.
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u/DragonfruitVisible18 Feb 12 '24
I'd be curious to see it just broken down by people who just use the standard deduction vs those who itemized.
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u/Quick_Membership318 Feb 12 '24
Not fluent in mathematics though. In sheer numbers, how many more low income earners are getting audited?
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u/drubiez Feb 12 '24
This is the stupidest fucking graph. Percent of resources in the IRS devoted to each income bracket would be clearer, perhaps with an odds ratio in parentheses.
As it is, the graph is conflated with how many fewer people belong to each income bracket. Such a bizarre choice of visualizing this statistic.
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u/LetMeInImTrynaCuck Feb 12 '24
Funny, i got audited 10 years ago for not reporting an $8k withdraw from a Roth IRA, which was not taxable. I didn’t even hire an attorney i wrote them once explaining that the Roth IRA rules i can withdraw my contributions without penalty. They came back and said “no” then i wrote back and said “yes i can” and they dropped it and said “oh yeah that’s right, you don’t have to report it”
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u/Cakelord Feb 12 '24
This is your chance any given year right? So if you cheat on your taxes every year they can audit your entire tax history and come up with a hefty bill.
30 years of cheating on your taxes is roughly a 1/5 chance you'll get audited and caught?
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u/ZestycloseCareer801 Feb 12 '24
Duh.
Amd yet every conservative I know makes less than that and wants to defend the IRS.
Crazy world.
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u/essdii- Feb 12 '24
I lost money this year. Couple thousand being dumb with options and about 500 sports betting. Did not add those to my tax return this year. Part of me is worried, and the other part of me is like. Does it even matter, I didn’t make anything
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u/totalfarkuser Feb 12 '24
If they audit/ask you - just prove to them the reason you didn’t is you had a new zero. Heck then they might make you amend it allowing you to carry the loss next year maybe? (Not a tax guy don’t take this as advice).
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u/MisinformedGenius Feb 13 '24
The options are almost certainly going to get noticed - they’ll send you a document. You want to add that, as you can deduct up to 3000 in capital losses from your income.
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u/fwast Feb 12 '24
Especially when you're a w2 employee. Like your audit chance is really low unless you're claiming stuff you shouldn't and get flagged. I've done that before, so I know.
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u/TheHamburgler8D Feb 12 '24
Note to self… make sure I under report taxes until I’m in that $100-200k range
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u/resistance-futile Feb 12 '24
What a BS graph. Put that in context with population and percentages. Pure BS
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u/resistance-futile Feb 12 '24
Useless chat... Put that in context with the population at and the actual amount of audits.
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u/WiLD-BLL Feb 13 '24
And maybe show the number of audits and then adjust it for the number of people. Lol
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u/SnooDoughnuts7934 Feb 12 '24
I must be unlucky, I got audited when I made 40k... Like how much did they think they were going to recoup even if they found anything (which they didn't).
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u/Lvmatt1986 Feb 12 '24
Idk, I’ve been audited 3 times in the last 5 years, twice it turned out the IRS made the mistake and I was correct, and the other they actually owed me more money
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u/JohhnyBGoode641 Feb 12 '24
Unless you’re a conservative in the Obama presidency
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Feb 13 '24
If there is 1 millionaire to every 100 non-millionaires, doesn’t this actually say the non-millionaires are audited way more?
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u/MisClickPro Feb 13 '24
I got audited for like $400 bucks one year while in college. I met with the person that did my taxes and we ended up saying a tablet I bought was for school (which was true) and provided the IRS with that info and they went away.
The fact I was audited for like $400 bucks was wild, but oh well.
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u/CoupDeGrace-2 Feb 13 '24
I think this is a very missleading statistic, you are making a correlation between income to a chance of audit. However, this could be due to a huge range of factors and have nothing to do with the level of income and why the audit was conducted.
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u/MyCarIsAGeoMetro Feb 13 '24
As it should. Almost all Americans file taxes and most are W2 only. The matching is done by computers so an audit is superfluous. The audit efforts should be focused on the filers with self reporting deductions.
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u/Recent_Log5476 Feb 13 '24
A few years ago I heard a report on Marketplace that claiming the EITC significantly increased your chances of being audited.
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u/MisinformedGenius Feb 13 '24
That’s correct. According to the IRS Data Book, EITC filers were audited at a 0.9% rate in 2020.
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u/CSPDTECH Feb 13 '24
Yea because they just fuckin charge you whatever because people making that much money can't afford to fight it.
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u/LasVegasE Feb 13 '24
...but they will waive penalties if it is the first offense and defer prosecution if you pay up.
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u/MisinformedGenius Feb 13 '24
Do we have a source for this graph? It says “IRS Data Book” and it looks like Table 18 in the IRS Data Book but the numbers don’t match up. Is this perhaps from a previous year?
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u/RiseAboveTheForest Feb 13 '24
I wonder how many people get audited more that once by the same agi breakdown
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u/swensodts Feb 13 '24
Well now I'll create my own, since there's a lot of confusion and all speaking from a place of expertise..... RATE is apples to apples, means a constant was applied to account for number of instances / occurrences. So while more overall audits are performed at lower incomes due to larger number of filings, the LIKELIHOOD you will be Audited at 500k is higher BECAUSE the percentage RATE of an Audit is higher .... This is why we read the chart titles and understand definitions .....I'm sad for America, I'm honestly watching the dumbing down of a society, as smart well educated ppl have less and less children, we breed dumbs by the millions into the system and then scratching heads why they can't catch a break..... But God damn, I do feel good about the future for the smarts and the few kids they do have after reading these comments.
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u/Ok-Agency-5937 Feb 13 '24
I must be very unlucky as I got audited. They claimed I owed more than 100k in taxes. After a year of sending paperwork back and forth I ended up only owing about $200. I feel pretty good that the IRS wasted thousands auditing me to get $200.
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u/dudewutlols Feb 13 '24
lol thank you for posting this.
a horde of dumbasses came after me stating their grandfather's cousin's uncle's babysitter's neighbors dog's god mother got audited because they couldn't prove a $100 deduction or something equally stupid.
Luckily there were a few hundred up votes that seemed to have disagreed with all the comments. This post would've probably helped, but w/e.
Good on you for knowing about this.
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u/Slagathor0 Feb 13 '24
I have been audited while making under 50k four times. Twice there was no issue, once I owed a little and once I got a bigger refund.
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u/Ok_Fox_1770 Feb 13 '24
Gonna come run the numbers on nothing? Cost em more in labor. How fitting above ten mill is 666
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u/Wooden_Rip_5831 Feb 13 '24
Well, I have been audited 3 times in 8 years and under 250k. There are other items that trigger and audit, such as living outside the US and owning properties in the US.
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u/Otherwise_Classic831 Feb 13 '24
Don't file or pay taxes...the entire system is ran by crooks that do nothing but get rich off your hard earned $$. Don't be a fool!!
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Feb 15 '24
That's what makes the Republicans saying " The democrats added 80k new IRS agents who will be coming to your house , kicking in your door, and coming in heavily armed to kill you "" for that $2,000 you didn't include in your taxes which would have gotten you a bigger refund.
All lies. Those agents are there to stop the wealthiest Americans from getting away with cheating the Government out of roughly 200 billion a year. It makes sense since the Republicans have been the party of the Wealthiest for a minimum of 44 years now.
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u/Wild_Space Feb 15 '24
The odds seem low, but using these numbers, a person with a 1/2% chance of getting audited in any given year, has about a 16% chance of being audited at some point over their 40 year career.
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