Home ยป IRS Audits Dropped Slightly in 2022

IRS Audits Dropped Slightly in 2022

The IRS divides taxpayers into different examination classes. The IRS sees the typical taxpayer reporting an income of less than $200,000. These taxpayers faced an odds of audit of just 1.9 out of every 1,000 returns filed (0.19%). This group accounts for 80 percent of all 1040 returns once these poorest wage earners and those reporting $200,000 or more in positive income are set aside.

Higher-income and more complex business returns with Schedules C or F (nonfarm and farm) revenue generally increased the odds of audit for those reporting incomes of over $200,000 but less than $1 million. However, the odds of audit for these groups still remained below the odds of audit experienced by the lowest income wage-earners IRS targets.

Returns for those without revenue from a business had an odds of audit of 4.9 out of every 1,000 returns filed (0.49%). The odds of audit rose to twice that for taxpayers reporting similar incomes but running a business or farm. Their odds of audit for these was 10.3 out of every 1,000 returns (1.03%).

Millionaires, as discussed previously, did have the highest odds of being audited. However, if one ignores the fiction of auditing a millionaire by simply sending a letter through the mail, the odds that millionaires received a regular audit by a revenue agent (1.1%) was actually less than the audit rate of the targeted lowest-income wage-earners whose audit rate was 1.27 percent!

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