A person's income level has considerable implications when it comes to tax issues. For one, it can influence how likely they are to be subjected to an audit by the Internal Revenue Service.
Generally, the more income a person has, the higher their likelihood of an IRS audit is. This can be seen in U.S. audit rate statistics for last year. In 2015, the IRS audit rate was:
- 0.76 percent for taxpayers with an under $200,000 income.
- 2.61 percent for taxpayers with an income of at least $200,000.
- 9.55 percent for taxpayers with an income of at least $1 million.
Also, very high income individuals have seen quite a different trend from the norm when it comes to audits in recent times. As we noted in a past post, lately, the general trend when it comes to audits has been a fall in audit levels. However, for individuals with a very high income, IRS audit likelihood has actually been on the increase. The 2015 $1 million and over income earner audit rate of 9.55 percent was a fair amount higher than the rate from the previous year, which was 7.5 percent.
As this underscores, each income level can trigger its own particular set of tax issues and concerns. Experienced tax attorneys understand this and can provide individuals of all income levels who are facing tax problems or issues with guidance which takes into account the relevant details of their situation, including their income situation and the particular issues it triggers.
Source: Forbes, "IRS Audited One In Ten $1 Million-Plus Earners In 2015, Correspondence Audits Up By A Third," Ashlea Ebeling, Febs 25, 2016