The IRS chooses some taxpayers and audits their tax returns every year. And an audit is examining or reviewing your informations and accounts to ensure you’re reporting things correctly and following the tax laws, which is troublesome for taxpayers.
In 2016, the IRS audited one million tax returns. Although this is less than one percent of the U.S. population, you should still be prepared–just in case you’re audited.
Want to know what might trigger an audit by the IRS? Here are nine red flags that might elevate your chances of having to undergo this unpleasant process.
You Make a Ton of Money
Even though the overall odds of a tax audit are small, they increase as you start earning more money. IRS data shows that in 2016, those with reported income over $200,000 were audited at a rate of 1.70 percent. That’s one out of every 59 taxpayers. Do you earn more than one million dollars a year? Your chance of an audit goes up even more. According to Kiplinger, one out of every 17 people earning $1 million or more were audited in 2016.
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