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Video: Why Does the IRS Audit People?

Updated for Tax Year 2016


OVERVIEW

The IRS performs an audit on an individual for a wide variety of different reasons. Find out why the IRS audits people with help from TurboTax in this video on tax tips.


Hello, I'm Sara from TurboTax, with some important information about IRS audits. The IRS is in the business of collecting taxes to help pay for the programs and services the government provides. Part of that job is to enforce the tax laws and make sure everyone pays what they owe. The only way the IRS can do this is by verifying some returns through an audit.

The IRS uses different types of audits to verify tax returns. It can range from simple correspondence by mail to an IRS agent visiting you at work or home. If your tax return is chosen for an audit, it does not mean you are in trouble. Just be sure to organize your documents and provide the IRS with everything it asks for.

Many of you probably wonder what your chances are of being audited. Although it is nearly impossible to calculate the chances of this happening, the IRS does reveal some of the methods it uses. Every tax return you submit initially receives a scored called The Discriminate Function Score. Though the IRS will not say what type of things effect your score, it does acknowledge that a higher score is more likely to result in an audit.

Many times a return can also be chosen because you report something out of the ordinary such as a charitable deduction that equals half your income or even when you fail to send a tax return at all.

Then, there are the random audits the IRS performs just to keep everyone honest. All TurboTax products come with our Audit Support Center which can help you identify the different types of IRS correspondence and plan your response if you are contacted. We also scan your return for common audit triggers before you file. For those who want even more peace of mind, TurboTax also offers Audit Defense for an additional fee which gives you full representation by a tax professional if you are audited.

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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


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