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Chances of an IRS Audit

posted Jan 6, 2012, 10:39 AM by Krozel Capital   [ updated Jan 24, 2012, 11:20 AM ]
You may have heard that your chance of being audited by the IRS is about 1%. While the overall IRS audit rate remains at this level, your rate may be higher if your income is over $200K. The IRS recently released its numbers and, in 2011, your chance of being audited was as follows:

        -1% for those earning under $200K annually 
        -4% for those earning $200K and up
        -12% for those earning over $1M

Other factors that may increase your chances of an audit include filing a Schedule C, taking the home office deduction and taking other large deductions that may catch the eye of the IRS. This does not mean you should not start a business, deduct working from home, or claim large legitimate deductions, but just be aware that you may have a higher chance of hearing from the IRS if you do.