Don’t Tempt the Taxman to Choose You for an Audit
![Business,Financial,,Accountant,Discussing,With,Partner,Are,Meeting,To,Audit audit](https://groco.com/wp-content/uploads/2019/08/shutterstock_1348347071-1024x683.jpg)
Don’t Tempt the Taxman to Choose You for an Audit
There are a lot of benefits to being ultra wealthy. High net worth individuals get to experience so many things in life that most people can only dream of. The wealthy also enjoy an extravagant lifestyle that other people only get to watch in movies or on TV. There’s no question that the wealthy get to enjoy some very nice luxuries that others will never experience. However, there are some downsides to being ultra-wealthy, especially as it pertains to taxes.
Wealthy Targeted by the IRS
It seems that when it comes to taxes, lawmaker never run out of reasons to try and tax the wealthy more. Likewise, did you know that the more money you make, the more likely you are going to be audited by the IRS? It’s true. While anyone is subject to being chosen for an audit by the IRS, over the last 15 years the total number of audits has gone down and the focus has grown more on the rich. For example, in 2013 the IRS performed 1.4 million audits on taxpayers. Guess which income bracket saw most of the audits?
- Income less than $200,000 – 0.88 percent were audited
- Income between $200,000 – $1 million – 3.26 percent were audited
- Income greater than $1 million – 11 percent were audited
The numbers don’t lie. The more money you make, the better your chance of joining the IRS’s audit club.
Other Common Audit Targets
So it turns out that being wealthy is not good when it comes to audits, but there are other factors that can make you more likely to be chosen for an audit. One of those factors is the IRS’s computer scoring system, which is known as the Discriminant Information Function (DIF). This system looks at tax returns based on exemptions deductions and credits in each of the given income brackets compared to the norms for those brackets. If those factors don’t fit the norms for your income bracket then you could have a greater chance of being selected for an audit.
Beware of Your Deductions
One of the biggest red flags that gets the IRS’s attention is abnormal deductions. When your deductions don’t fit your income, like for example you report a high mortgage interest deduction but your income is very low, that could set off an alarm. Other deductions that get the IRS’s attention include business loss on a Schedule C, large casualty losses, and noncash charitable deductions.
Be Honest and Don’t Be Afraid
However, if you have legitimate deductions and you are being completely honest in your return, then don’t cheat yourself out of your full refund because you’re afraid you might get chosen for an audit. If you file an honest return, then you have nothing to be afraid of. Even if the IRS does choose to audit you, as long as you have proof of your claims, then you will have nothing to worry about.
Helping You Get a Full Refund
Finding out you have been chosen for an audit is one of the scariest situations anyone can go through, but it doesn’t have to be. If you have been chosen for an audit then contact GROCO for help/ Likewise, if you need help with your tax return then get ahold of us as soon as you can. We will help you prepare an honest and accurate return and help you get as much money back as legally possible. Call us at 1-877-CPA_2006 for more information, or contact us online.
For more updates follow GROCO on Facebook
—————————————————————————————————————————————————————————————————————
We hope you found this article about “Don’t Tempt the Taxman to Choose You for an Audit” helpful. If you have questions or need expert tax or family office advice that’s refreshingly objective (we never sell investments), please contact us or visit our Family office page or our website at www.GROCO.com. Unfortunately, we no longer give advice to other tax professionals gratis.
To receive our free newsletter, contact us here.
Subscribe our YouTube Channel for more updates.
Alan Olsen, is the Host of the American Dreams Show and the Managing Partner of GROCO.com. GROCO is a premier family office and tax advisory firm located in the San Francisco Bay area serving clients all over the world.
Alan L. Olsen, CPA, Wikipedia Bio
GROCO.com is a proud sponsor of The American Dreams Show.
The American Dreams show was the brainchild of Alan Olsen, CPA, MBA. It was originally created to fill a specific need; often inexperienced entrepreneurs lacked basic information about raising capital and how to successfully start a business.
Alan sincerely wanted to respond to the many requests from aspiring entrepreneurs asking for the information and introductions they needed. But he had to find a way to help in which his venture capital clients and friends would not mind.
The American Dreams show became the solution, first as a radio show and now with YouTube videos as well. Always respectful of interview guest’s time, he’s able to give access to individuals information and inspiration previously inaccessible to the first-time entrepreneurs who need it most.
They can listen to venture capitalists and successful business people explain first-hand, how they got to where they are, how to start a company, how to overcome challenges, how they see the future evolving, opportunities, work-life balance and so much more..
American Dreams discusses many topics from some of the world’s most successful individuals about their secrets to life’s success. Topics from guest have included:
Creating purpose in life / Building a foundation for their life / Solving problems / Finding fulfillment through philanthropy and service / Becoming self-reliant / Enhancing effective leadership / Balancing family and work…
MyPaths.com (Also sponsored by GROCO) provides free access to content and world-class entrepreneurs, influencers and thought leaders’ personal success stories. To help you find your path in life to true, sustainable success & happiness. It’s mission statement:
In an increasingly complex and difficult world, we hope to help you find your personal path in life and build a strong foundation by learning how others found success and happiness. True and sustainable success and happiness are different for each one of us but possible, often despite significant challenges.
Our mission at MyPaths.com is to provide resources and firsthand accounts of how others found their paths in life, so you can do the same.
Simple Strategies for Avoiding an IRS Audit
Simple Strategies for Avoiding an IRS Audit sounds easy, but is it? Yes! Are you one of those individuals where the fear of an IRS audit keeps you awake at night? Well, you are not alone. It is one of life’s more complex fears. Never fun going into a room with someone that wants money…
Strategies for Representing Yourself in an IRS Audit
Strategies for Representing Yourself in an IRS Audit Have you been selected by the IRS for an audit? It’s OK. Relax; you can get through this. Although we advise you to never try to go through an audit by yourself, if you really like a challenge and would rather do it by yourself, there are…
U.S. Government Could Lose Billions Due to Fewer Audits
U.S. Government Could Lose Billions Due to Fewer Audits Taxpayers rejoice! There may actually be some good news about tax returns this year. The US Government could lose billions due to fewer audits. That’s because according to reports, due to reduced staff, the IRS may be forced to reduce the number of audits it would…
- « Previous
- 1
- …
- 470
- 471
- 472