There has been a decline in audits over the past decade due to budget and personnel reductions within the IRS.
Does the mention of the IRS make you nervous? Are you fearful that you may receive an audit at some point? Have you ever been audited before?
Many Americans fear audits due to the several myths that cause them to think that way.
Keep reading to learn about IRS tax audits and debunk some of today’s myths.
Everyone Carries the Same Risk
This is a myth because there is not an equal chance of each person getting audited. The IRS says that the likelihood of an audit significantly increases as income grows. This means that people who fall into lower tax brackets or have a consistent income over time are not as likely as someone whose earnings keep rising to get audited.
While you can get audited at any point, there is less concern when your financial profile is similar from year to year. This doesn’t alert the IRS to any strange activity like an increase in income could and working with a local accountant can help clear up any questions you may have.
IRS Tax Audits Mean You’ll Go to Jail
While the fear of a negative outcome with your tax audit could result in criminal investigations and indictments, these cases have been on the decline in the past decade.
This situation is a worst-case scenario for most people. Typically, a few adjustments need to be made to your taxes and you’ll be good to go. Failing to respond to the IRS could result in fines and additional issues, so it is better to address the audit as soon as you are made aware of it.
Changing your perspective from fearing tax audits to understanding their purpose can help as well. If you are following the process correctly and keeping track of the information, you won’t have anything to worry about. If you find yourself in this situation, click here to learn more about how a tax attorney can help.
Filing Your Taxes Late Means You’ll Get Audited
The focus when filing taxes should be to get the information correct and then submit it. This doesn’t always happen within the deadline and there are options to help. Consulting professional accountants when it comes to tax questions or concerns is a good first step.
Asking for an extension can give you extra time to properly prepare the information needed. This doesn’t raise a red flag because you are taking the time necessary to correctly submit the tax information.
If you miss the deadline and never filed for an extension, it doesn’t automatically mean that you will get audited. There may be more attention paid since you submitted late but if the forms are correct, it won’t matter as much as suspicious activity will.
Stay up to Date
Now that you have read about the common IRS tax audits myths, you can be prepared by continuing to educate yourself in this area. Stopping to consider what others are saying can help you save money and correctly approach tax season. Check out our blog for more informational articles like this one.