While the odds of getting audited by the IRS are low, Americans with certain incomes are more likely than others to face closer examination.
Ultra-wealthy taxpayers with annual incomes exceeding $10 million are the most likely to face scrutiny from the IRS, most recent available data from the agency shows.
But the second most likely group are those who claim a particular credit – who tend to be low and moderate-income taxpayers.
Taxpayers who claim the Earned Income Tax Credit – a tax break for those earning below a certain threshold – are more than twice as likely as others to get audited, according to data reported by CBS.
It comes after the IRS pledged to increase the number of audits for Americans earning more than $400,000 a year in a bid to crack down on tax dodgers.
As part of new efforts under the Biden Administration’s landmark Inflation Reduction Act, the IRS also vowed to ‘add new fairness safeguards’ for those claiming the EITC.
‘Audit rates of those receiving the EITC remain at high levels in recent years while rates dropped precipitously for those with higher income, partnerships and others with more complex tax situations,’ the agency said in a statement in September last year.
While the majority of tax returns are accepted, some face closer inspection from the IRS in the form of an audit. This is to check whether income, expenses, credits and deductions have been reported correctly – and to help deter tax fraud.
According to latest IRS data from the 2020 tax year, only 0.2 percent – or around 1 in 500 – of all individual income tax returns triggered an audit, CBS reported.
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