As the story goes, there are two things that you can count on in life, death and taxes, right? While all of us are more than familiar with paying our taxes, there is a common worry among many that they will one day get audited. Now, we aren’t here to say that you will never get audited, but we would like to shed some light on why we think you shouldn’t sit around worried about it. Mark Dicus & Company is here to talk about some of the reasons why you shouldn’t be too worried about a tax audit.
How Likely is it that I’ll Be Audited?
Like mentioned above, we can’t say that it will never happen, but the chances of you getting audited are pretty darn low. In fact, your chances are around 1 in 333. However, if you are in the middle class that submits their taxes on time and have a relatively straightforward tax return, the chances of getting audited are even lower than that number.
Is a Tax Audit Serious?
For many people, when they think about getting audited, they think they are surely going to get in trouble and fined someway. While it may be true that the IRS does often do audits because they suspect something, but that isn’t always the case. Some people are selected for an audit out of chance more than anything else. Most of the time, people that get audited are high income earners. If you don’t fall under that category, you don’t have a lot to worry about. High income earners are often selected because of the complexity of their taxes.
How Far Back Can IRS Audit You?
While there is a chance that the IRS can audit you up to six years after you file, the chances are incredibly slim. They usually only go back about 2-3 years to audit someone. If they find a big error in that audit, it may cause them to look deeper into past tax returns.
How Can You Reduce Your Chances of Being Audited?
The good news is that there are ways to make it more likely to avoid getting audited. There are definitely certain things on a tax return that will become a red flag for the IRS. Things like business losses on hobbies rather than legitimate businesses, an unusual amount of credits and deductions, or abnormally large casualty losses will put you at a higher risk of getting audited.
Tax Preparation, Filing, Planning & More in Salt Lake City, St. George, West Valley City, Provo, Orem, West Jordan & Greater Cedar City, Utah
If you do happen to get audited by the IRS, the important thing is that you shouldn’t panic. It doesn’t mean that you are automatically in trouble. If you have questions about your taxes or need help preparing them, you can turn to Mark Dicus & Company to help ensure they are done right. We will ensure there is as small a chance as possible that you will get audited. Call us today!