As a tax practitioner with Mitchell Tax Professionals in Lancaster, California, Alvina Mitchell guides at team of professionals in providing data-supported tax preparation and filing services. In addition, Alvina Mitchell provides and supports the company's audit response services.
Although any taxpayer may at any time receive an audit notice from the Internal Revenue Service, there are a number of elements of a tax return that can increase a person's risk. Those who earn $10 million or more, for example, have a one in five chance of being the subject of an audit, while the risk for lower earners is below 1 in 100. If a taxpayer's income drops significantly from one year to the next, the change may increase the likelihood of an audit.
Self-employed individuals may also have a higher risk of audit, particularly if their returns include home office and other business deductions but only minimal to moderate income. Careful documentation is essential if the IRS requests proof that these deductions are valid. The same holds for any taxpayer who claims home office or car deductions as an employee of a business.
The IRS also has a higher chance of auditing taxpayers whose deductions are outside the norm for their income levels. Deductions include charitable contributions as well as mortgage interest and medical expenses, all of which the IRS tracks by comparing the average within a particular income category.
Finally, the IRS is more likely to audit a taxpayer who has failed to file a required form, or whose tax information is not consistent across documents. For this reason it's extremely important for taxpayers to carefully follow IRS instructions and check their arithmetic, or to hire a reputable firm that prioritizes accuracy and attention to detail.
