What are the chances of being audited?
Tax Time! That dreaded time of year that we all know so well is never too far away. It is always in the back of your mind whenever you get a paycheck. You always remember that when April comes around again, you will have to account for your money and determine whether you have to give the government a part of it. Despite the fact that April heralds the beginning of baseball season and is marked by a greater abundance of sunny days as the winter comes to a close, it has a bad reputation because it is the finale of the feared tax season. And what is the biggest fear during tax season? The audit. But what are your actual chances of being audited?
In the early months of every year, millions of individuals are filling out tax forms, rummaging through piles of paperwork, and shelling out big money to accurately file on time. Once everything is in the mail, that old pang of fear rears its head. Did I forget something? Did I add an extra 0? Did I claim too many exemptions? From that point, until you receive your refund, there is an excruciating period of time that is spent playing the “waiting game”, keeping your fingers crossed and praying to your Higher power of choice.
It turns out that auditing fears are substantially unfounded for most people. In the fiscal year of 2008, 137 million tax forms were filed. According to Marketwatch.com, the percentage of those actually audited was miniscule and varied directly with the level of income of the individual.
In 2008, of those 137 million forms, 1370000 of them or 1 out of 100, were audited. This rate falls to less than 1 in 100 if the filers’ income for that year is less than $200000.
Mybudget360.com reports that more than 4 out of 5 taxpayers made less than $200,000 in 2008. This means that almost 1 out of 5, or about 25 million taxpayers made $200,000 or more in the year. According to wikianswers.com, of those 25 million people, there were only about 500,000 taxpayers who made $1 million or more. The audit rate of those who made $200,000 to $1 million, that which pertains to approximately 24 ½ million taxpayers, is about 1 out of 33.3. For the remaining 500,000 top earners, the rate jumps to about 1 out of 20.
The findings after all of this? My advice is to relax. If you are like most of us, your yearly earnings total such a small amount that your friendly neighborhood auditor won’t even raise an eyebrow when examining your tax submission. And you were worried. Ha ha! Ok, I’ll admit it. I was too.
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