But if stretching the truth to squeeze out a few more refund dollars sounds tempting, check out a Forbes rundown by Janet Novack and Ashlea Ebeling of some the ways IRS may catch you. Bottom line - fibbing about stuff that isn't reported on a W-2 or 1099 isn't as easy as you think.
Also your chances of raising auditor's eyebrows appear to go up when your income does. IRS calculates your chances of an audit are just less than one in a hundred for us working schlubs, but one in 18 for folks with seven figure incomes, who presumably can hire better defense help.
Your odds are approximately:
Income | Field audit | By-Mail audit | Any Audit |
Under $200,000 | 1 in 519 | 1 in 133 | 1 in 106 |
$200,000 and higher | 1 in 83 | 1 in 58 | 1 in 34 |
$1 million and higher | 1 in 32 | 1 in 41 | 1 in 18 |
Source: Internal Revenue Service.
Also, IRS expanded on its plans to clamp down on overly-erring filers in a 100-page outline IRS published about 18 months ago.
Surveys show that most of us think it's wrong to cheat on our taxes. But in real life many of us do it anyway, especially if we buy on line, cross a state line to where sales taxes are lower, swap out work with someone or even hire yard work done, Jim at bargaineering.com points out.
Federal and state tax collectors are getting more sophisticated about finding those transactions. So, as Sgt Esterhaus on Hill Street Blues used to remind us, let's be careful out there.
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