There are a range of things that could lead the Internal Revenue Service to decide to audit a given tax return. Among these are concerns related to credits claimed in the return. One type of tax credit that is involved in quite a few audits here in the U.S. is the earned income tax credit.
This can be seen in statistics from the IRS’ most recent annual data book. Reportedly, over a third (36.7 percent) of the just over 1 million IRS audits of individual tax returns that occurred in the 2016 fiscal year were initiated over concerns related to the earned income credit.
So, while the odds of getting audited are low for taxpayers generally, an audit can be a very real possibility for individuals who have claimed this tax credit, particularly if there are any red flags on their returns that could point to the possibility of the credit being claimed improperly.
Now, when a person is being audited in relation to the earned income credit, all kinds of issues related to the taxpayer’s claim of this credit could be impactful. Also, issues unrelated to the credit could arise, as there are many different things the IRS could end up looking into during the course of an audit. For any issue that comes up during an audit, it can be important for a taxpayer to have guidance on how best to protect their interests when it comes to the issue. Skilled tax law attorneys can help taxpayers who are being audited over an earned income credit claim with the various matters and steps related to their audit.
Source: AccountingWEB, “What Are Your Chances of Being Audited? IRS Data Book Provides Some Clues,” April 4, 2017