Now that tax season is under way it is time to consider audit proofing your tax return. Small steps you take today can save you time, money and headaches later.
First, the good news. Audit rates have been falling the past decade by a substantial amount. For 2018, the IRS audited .45% of individual returns, down from .59% in 2017. IRS funding cuts between 2011 and 2017 cost the IRS 27% of its enforcement staff (an 18% decline in tax examiners and a 40% reduction in revenue officers), according to the Government Accountability Office.
The reduction in IRS enforcement efforts does not mean the IRS doesn’t have the authority to aggressively deal with tax scofflaws. The IRS still carries a big stick and focuses on certain problem areas. Taxpayers claiming the earned income credit faced an audit rate in excess of 1% in 2018, compared to the overall audit rate of individual tax returns the same year.