The Chances of Being Audited

Audit Rubber Stamp Shows Financial Accounting Examination

2015 audit statistics show continued changes

What are the Chances?

Every year the IRS publishes the statistics on the number of tax returns they are examining. Provided here are the last three years of published information and a look back to 2008 to see any trends:

Percent of Individual Tax Returns Audited
Fiscal Year Year 2015 2014 2013 2008
All Individual Tax Returns 0.84% 0.86% 0.96% 1.00 %
No Income (AGI) 3.78% 5.26% 6.04% 2.15%
Income under $25,000 1.01% .93% 1.00% .90%
$25,000 – 50,000 .50% .54% .62% .72%
$50,000 – 75,000 .47% .53% .60% .69%
$75,000 – 100,000 .49% .52% .58% .69%
$100,000 – 200,000 .64% .65% .77% .98%
$200,000 – 500,000 1.54% 1.75% 2.06% 1.92%
$500,000 – $1 million 3.81% 3.62% 3.79% 2.98%
$1 million – $5 million 8.42% 6.21% 9.02% 4.02%
$5 million – 10 million 19.44% 10.53% 15.98% 6.47%
$10 million and over 34.69% 16.22% 24.16% 9.77%
Note: These audit rates are stated as a percent of total tax returns in each Adjusted Gross Income (AGI) class as claimed on individual tax returns. In general the examinations are for tax returns filed in the previous calendar year.

Source: IRS Data Book

Observations:

  • Overall, you have less than 1 out of 100 chance of being selected for an audit. The .84% audit rate is down .02% versus 2014.
  • The IRS is continuing its focus on returns with no AGI or negative income. This group’s 3.78% audit rate is down versus last year, but is still significantly higher than the 2.15% audit rate in 2008.
  • The IRS continues its focus on who pays the income tax. Those with incomes over $500,000 continue to have audit rates significantly higher than in 2008.
  • Over 1/3 of those with incomes over $10 million were faced with an audit.

Having good records

Your best defense in case of an audit is retaining adequate records for as long as you need them. This includes retaining copies of original tax returns and any supporting documentation. Please keep all receipts, statements and cancelled checks that support any tax return entry. Also retain legal documents, confirmation of asset purchases, asset sales, real estate transactions, mileage logs, and informational tax forms. Remember the IRS can audit your tax return for three years after the later of the filing date or when you filed your tax return. This time-frame is six years if your income is understated by more than 25%. Include any state record retention requirements as you review when it is safe to destroy old records. This can add one to two years to your recordkeeping requirements.