January 25, 2012
According to a recent Kiplinger Tax Letter, the rate of individual tax audits remained steady for 2011 at just over 1% of all individual returns audited by mail or in person - that is 1 return audited for every 90 filed. If you reported over $1 million in income, you had a 1 in 8 chance of an exam - a little over 12% of these returns were audited. The chance of audit declined with the level of income but there was still a 1 in 25 chance of an audit if you income exceeded $200,000. All other returns experienced about a 1% rate of audit. In the event of an audit, your best defense remains good documentation of your income and your deductions. Please ask us if you have any questions about what records to maintain.