- Days left
wringerThe tax gods smiled on me when they made me the younger brother of a CPA -- a guy who saved my butt countless times back in the day when I didn't know a tax return from toilet paper. Thus I've always had the advantage of instant, free tax advice when I need it.

Yet no matter how many times I asked Brother Joe about beating the IRS audit system, he was always pretty cautious, and 100 percent truthful. "There's no fool-proof way to do it," he'd tell me.

But now comes news from the most unlikely of sources -- the IRS itself -- that your chances of being audited are 1 in 100 if you follow one simple rule: Show an income under $200,000.

IRS enforcement numbers released last Tuesday show that returns under that amount have a 1 percent chance of getting audited, according to a brief on msnbc.com. Show an income of $200,000 and above, and your chances of an audit nearly triple, to about 3 percent.

And if you're Joe or Jane Millionaire, then prepare to follow the rock 'n' roll advice of John Fogerty and make the house look like a rummage sale. Your audit chances jump to more than 6 percent if your returns show earnings of $1 million or more.

You may wonder, as I do, how else you can avoid an audit. I know, I know: I shouldn't expect the IRS to hand over its entire playbook. But according to the Internet site WorldWideWeb Tax, certain characteristics could likely raise a red flag with auditors. These include:

  • You have large amounts of itemized deductions on your tax return that exceed IRS targets.
  • You claim tax shelter investment losses on your tax return.
  • You have complex investment or business expenses on your tax return.
  • You own or work in a business which receives cash and/or tips in the ordinary course of business.
  • Your business expenses are large in relation to your income on your tax return.
  • You have rental expenses on your tax return.
  • A prior IRS audit resulted in a tax deficiency.
  • You have complex tax transactions without explanations on your tax return.
  • You are a shareholder or partner in an audited partnership or corporation.
  • You claim large cash contributions to charities in relation to your income on your tax return.
  • An informant has given information to the IRS.

If you're at all like me, chances are none of these areas should cause you any concern. (Geez, I don't even know what a tax shelter investment loss is.) Plus, if I do get audited, I can always call Brother Joe.

But talk about news some of us can use. Like: "Girls Gone Wild" founder Joe Francis, who claims the IRS is out to get him.

Increase your money and finance knowledge from home

Timing Your Spending

How to pay less by changing when you purchase.

View Course »

How much house can I afford

Home buying 101, evaluating one of your most important financial decisions.

View Course »

TurboTax Articles

Video: What Days of the Week Does the IRS Deposit Tax Refunds?

There is no doubt that many taxpayers file their returns before the April deadline so they can get their tax refunds quickly. But remember, the IRS does need some time to process your tax return before it can issue the refund. Watch this video to learn more about when you'll be receiving your tax refund.

Video: Guide to Payroll Taxes

As an entrepreneur, you probably realize that there are some business expenses you just can't control -- like the payroll taxes you have to pay for yourself and each person you employ. Watch this video to find out more about payroll taxes and how they may affect your business.

Add a Comment

*0 / 3000 Character Maximum