How likely is it to get audited by the IRS?

Question

I ask because I am self employed and have to keep receipts for EVERYTHING. My mom is always ragging on me because you "never know when you could get audited" because I haven't been the greatest at saving every single receipt... But I've never heard of it happening. How likely is it? Thank you

TIM... not likely, what's that supposed to mean? I've had the same accountant for six years and we write everything down, go over everything, and guess what I PAY 1,840 IN TAXES EVERY THREE MONTHS!!! I'm asking a serious question...

shikikbeek... did i say i was trying to **** with the IRS? My simple question was how likely is it? Because i have to save EVERY single receipt, so when I dispose of one, it freaks me out, and my question was, should i just calm down... geez.

Answer 1

For every line on every tax return, the IRS has statistical data for every type of business in every region of the U.S. They already have an expectation of a "normal range" for your particular gross income. If anything appears to be excessively out of that range-that's a flag for an audit.
If you file schedule C-that's a flag for an audit.
If you claim a home based business-flag for an audit.
If you have large amounts claimed for charitable donations-flag for audit.
All-in-all, the IRS only audits probably between 2 1/2 & 5% of the filing population.
The chances of getting audited are slim, but by fitting into some of those strange categories, you increase your chance.
The IRS has hired over a thousand new auditors this year, so the number of audits will increase in 2007.
Your mother is correct...save your receipts, because if you do get audited, you MUST have them-the auditor can disallow every amount you cannot verify.

Answer 2

Any communication from the IRS on the subject of an skipped over merchandise or an increse in tax is an audit. A paper audit to make constructive yet an audit all the comparable. you have no longer any greater suitable threat of being audited than earlier as long as you do no longer make the comparable mistake back.

Answer 3

I'm self-employed at I just got audited a couple months ago. It turns out I made a typographical error in recording one of my stock trades in Jan 2004. It took 2.5 yrs for them to catch the error, but their computer finally caught up with me. They sent me a bill for $32,000 stating if I could not prove I had made a legitimate error, I would have to pay the full amount within 30 days. I fixed up my error, sent in the corresponding original documentation and recalculated everything and it turned out they owed me $42. They just sent the check last week.
The point is, they can go back up to 6 years and audit your returns so unless you want to live in paranoia for the next 72 months, I'd suggest doing your taxes as though Uncle Sam was looking over your shoulder. And keep your receipts since the burden of proof remains with the tax filer, not the government.

Answer 4

I think self employed people are more likely to get audited, but as long as you are being completely honest, and it sounds like you are, you should have no problem. But it sounds like you need to try and be more organized with your receipts because it is not fun if you do get audited and all things do not add up. It's pretty tough to get everything straightened out. But I would think if you are paying a lot in taxes and it looks like you are not trying to cheat the government, they would not pick on you.

Answer 5

What I've read is that you are more likely to get audited if you have any single figure that is way higher or lower than normal for your income level.

My inlaws had 13 children and they got audited because of that. They had to produce birth certificates, etc. This was many years ago, and I think an IRS official even came to their house to see if they really had that many children...LOL.

Just watch for higher-than-normal amounts. That increases your likelihood.

My husband and I have never been audited, in 35 years.
We are very average people with normal amounts on most lines.

Answer 6

I don't know the exact figure - but the IRS works on a formula and you are "IT"!! You are self-employed - young - single (?) and they haven't audited you yet? You appear to raise every "flag" they have to target who gets audited. Listen to your Mom - she's right. If you don't have a receipt you're in trouble. I don't mean criminal trouble unless you're attempting to defraud - I mean you'll have to pay tax and penalties (that's the BIG one) on everything you can't prove.
LISTEN TO YOUR MOM!!
Think of all the Accountant's fees you'll have to pay, too...
MOM'S ARE RIGHT!!

Answer 7

My best friend misstated her earnings and was audited which led to her bank account being frozen. Her funds have been frozen for 1 year come November. It affected her credit which caused her to have to live out of a hotel for almost two months, cause the house that she was leasing was being sold and she had to find another residence but due to the audit which caused negativity on her credit report she had a really hard time leasing another home this is why she ended up living out of a hotel for almost two months. I would not fuuuck with the IRS if I were you!!

Answer 8

It may change with more electronic filing but they dont come after people unless they make over 6 figures without paying much in taxes.

Answer 9

They audit 1 in 32,484

Answer 10

If you're rich, pretty likely. There's more at stake....and if you're a hooker or dancer because it's hard to prove your income. Believe me, I know!