Here’s a book that’s probably not on your summer reading list…but if you make a lot of money it should be.
It’s called the IRS Data Book.
It’s not as exciting as a Tom Clancy novel…but still fascinating in its own way.
The IRS Data Book is updated every year and it provides a great look inside the world of the IRS. The book points out all kinds of interesting stats including the number of tax-returns filed that year and how much tax revenue was collected. For example, in 2012 Americans filed 146 million individual tax returns…and the IRS examined a little more than 1% of them.
Going from percent to real numbers…that means the IRS audited 1.5 million Americans that year.
You might be patting yourself on the back by not being one of the 1.5 million audited Americans in 2012, but have you ever wondered your probability of being audited in the future? Like most things having to do with money…it all depends on how much you make.
For greater insight into this answer, take a look at this recent chart in The WSJ:
Income % of returns audited
General population 1%
$500,000 – $1 million 3.57%
$1 million – $5 million 8.9%
Greater than $10 million 27.4%
So what do you know…the more you make the greater your chance of being audited. Most people kind of know this, but now you know your approximate audit risk based on your reportable income.
The WSJ report also gives additional insight into higher risk audit activities. These activities include:
• closely held businesses
• partnership filings
• hedge fund portfolios and other complex investments
• sale of a business
• large charitable contributions
• large deductions
Our affiliate team of leading tax attorneys have helped approximately 5,500 business owners across the U.S. lower their taxes and lower their risk of audit. In fact, after working with thousands of wealthy business owners across 40-50 different industries, their audit rate is under 1% — which is even lower than the general population.
If you or a business owner you know wants to reduce your chances of being audited…plus save potentially 20-45% on taxes going forward, call or email us today for your free tax savings and audit reduction analysis. When was the last time you got a free second opinion on your second biggest expense…plus learn how you can reduce your likelihood of being audited?