What are your chances of getting audited by the IRS? Your guess is probably wrong

By Will Chen on 13 April 2007 (Updated 10 June 2007) 5 comments

turbo tax war

According to this Kiplinger's tax tip video, only 1 in 150 personal tax returns get audited. Realistically speaking, your odds of getting audited are probably even lower than that. In fact, it's virtually zero.

The Kiplinger editor calls the taxpayer's fear of audits "very stupid." He explains that you will not get audited as long as you don't claim any insane tax deductions. Therefore, everyone should be aggressive and take advantage of all the available deductions within reason.

Our irrational fear of audits

One recent survey conducted by a CPA at Louisiana State University shows that the average taxpayer believes 1 in 7 people gets audited by the IRS. Over 80% of the people surveyed had unrealistically high expectations of getting audited.

When the survey takes into consideration the likely income bracket of the participants, the results get even more ridiculous:

Taxpayers with the least revenue perceived their audit potential at greater than 25 percent. [In reality, your chance of getting audited is 0.6%.]

Conversely, taxpayers with the greatest revenue potential perceived less of an audit potential (15 percent). Source: Dissertation of William VanDenburgh 59 (PDF).

In other words, people with the least money to report actually worry the most about getting caught.

Putting it in perspective

Instead of worrying about the IRS, you might think about these other more pressing problems:

  • Chances of dying from heart disease: 1 in 5

cat and taxes

  • Chances of dying from cancer: 1 in 7
  • Chances of dying from a stroke: 1 in 24
  • Chances of dying from a vehicle accident: 1 in 84
  • Chances of getting audited: 1 in 150

So relax. Go out. Get some excercise. Stroke the kitty. Play some Warcraft. The taxman is not coming for you. But if you insist on getting in your taxes on time, here's a 35% off TurboTax online deal you can check out.

Even if you can't pay the IRS it is not the end of the world.

Photo by Travis Johnson and Dizznbonn

 

Tagged: Taxes, audit, IRS, taxes
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Guest's picture
Guest

I'd add: Chances of dying: 100%

Will Chen's picture

Death and taxes what a combo.  =)

Guest's picture

Nobody likes to pay taxes, but everyone wants to live in a safe, organized society with clean water and good roads. If you want a no-tax society, look at the third world. I would prefer the government be able to inspect imports for safety, maintain quality schools, and protect the environment and border.
Balance, as in some many things, remains key. That's why I'm unsure about the advice telling people to aggressively pursue tax-deductions - especially in a time of real national crisis. Personally, I favor a far simplier tax system instead of this maze of confusing regulations and deductions. I hope that Turbo Tax will make this often frustrating process less mysterious and quicker.

Guest's picture
Guest

Agree with a simpler tax system, but paying taxes don't necessarily means all of these benefits you mentioned, for instance in Brazil the taxes are probably 3 times of what we pay here, in others words they make a lotta money with taxes yet there are no quality schools, roads, medical and etc etc, in short what i'm trying to say is, it doesn't matter how much money the government charges everyone's ass, if they don't apply this money accordingly or if they don't control their balance, it will never be enough.

Guest's picture
Guest

Hang on a sec, you compare these stats:

* Chances of dying from heart disease: 1 in 5
* Chances of dying from cancer: 1 in 7
* Chances of dying from a stroke: 1 in 24
* Chances of dying from a vehicle accident: 1 in 84

To

* Chances of getting audited: 1 in 150

But the first four stats are chances *over the course of a lifetime*, while the last one is chance *per year*.

If your chance per year of being audited is 1/150, your lifetime chance of every being audited, over, say, a 40-year working life, is, I think, (1 - (149/150)^40), which is pretty close to 1 in 4.

(Of course - this assumes that audits are evenly and randomly distributed, which they surely aren't).