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July 21, 2014 by Mark MacDonald, Advanced Wealth Preservation

Does Higher Income Increase Your Chance of Audit?

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?

Filed Under: Tax Planning

Call: (908) 444-4599

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Does Higher Income Increase Your Chance of Audit?

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Investment Advisory Services offered through Brookstone Capital Management. LLC (BCM), a registered investment advisor. Advanced Wealth Preservation and Brookstone Capital Management are independent of each other. Insurance products and services are no offered through BCM but are offered and sold through individually licensed and appointed agents. Any comments regarding safe and secure investments, and guaranteed income streams refer only to fixed insurance products. They do not refer, in any way to securities or investment advisory products. Fixed Insurance and Annuity product guarantees are subject to the claims‐paying ability of the issuing company and are not offered by Brookstone Capital Management. Third party ratings and recognitions are no guarantee of future investment success and do not ensure that a client or prospective client will experience a higher level of performance or results. These ratings should not be construed as an endorsement of the advisor by any client nor are they representative of any one client evaluation. The National Social Security Advisor certification is obtained by completing and passing a certification exam and requires biennial continuing education. The NSSA certification is not affiliated with or endorsed by the Social Security Administration or any other government agency. More information regarding the certification can be found at https://nationalsocialsecurityassociation.com.

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