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