Chance of IRS Audit Increases With Income Level

April 29, 2013

If you’re like most taxpayers, on or before April 15 when you hit the button to confirm, drop the envelope in the mailbox or sign your form for the tax preparer, your first thought very well might be “I hope I don’t get audited!”

But just what are your chances of having your income tax return audited by the IRS?

It depends on how much money you make.

The average odds are approximately 1 in 100. In the latest figures released by the IRS, for tax year 2011, more than 1.4 million taxpayers were audited of 143 million tax returns filed.

But for Americans in higher tax brackets, the chances go up, with the wealthiest taxpayers having a 1 in 4 chance of hearing from the IRS.

The likelihood of being audited for taxpayers with the following adjusted gross incomes is:

• Between 25,000 and $50,000 – 0.70 percent
• Between 50,000 and $100,000 – 0.64 percent
• Between $100,000 and $200,000 – 0.85 percent
• From $200,000 to $500,000 – 1.96 percent
• From $500,000 to $1 million – 3.57 percent
• Between $1 million and $5 million – 8.9 percent
• Between $5 million and $10 million – 17.94 percent
• More than $10 million – 27.37 percent

For business income, the same is true: the higher the revenues, the higher the number of audits.

For businesses other than farms, with the following gross receipts, the chance of being audited is:

• Under $25,000 – 1.2 percent
• Between $25,000 to $100,000 – 2.4 percent
• Between $100,000 to $200,000 – 3.6 percent
• More than $200,000 – 3.4 percent
• Between $200,000 to $1 million – 2.8 percent
• More than $1 million –12.1 percent

Only 1 in 200 farm returns was audited.

For corporate returns, other than S corporations, the average chance of an audit was 1.5 percent. For partnership and S corporation returns, the audit rate was just 0.5 percent.

Again, the percentage goes up with the total assets of the corporation. The largest corporations are almost sure to be audited.

• $250,000 to $1 million – 1.7 percent
• $1 million to $5 million – 2.1 percent
• $5 million to $10 million – 2.6 percent
• $10 million to $50 million – 10.5 percent
• $50 million to $100 million – 20.7 percent
• $100 million to $250 million – 23.2 percent
• $250 million to $1 billion – 22.7 percent
• $1 billion to $5 billion – 31.4 percent
• $5 billion to $20 billion – 45.4 percent
• More than $20 billion – 93 percent