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1 in 8 Millionaires Audited Last Year, and Other Tax Trivia
Posted By Miranda Marquit On 01/25/2012 @ 12:11 pm In Taxes | 2 Comments
Who’s paying taxes? We all like to know — and we all like to make sure that everyone else is paying his or her “fair share” in taxes. One way to figure out whether or not people are paying what they’re supposed to is to take a look at who’s being audited.
During fiscal year 2011, the IRS  audited 1 in 8 millionaires. That number represents an increase in enforcement, and an effort to catch millionaires underreporting their taxes that hasn’t been seen since 2004. In a world where many are disgruntled about the 1%, many of the 99% can rest a little easier knowing that the IRS is stepping up its efforts to make sure that millionaires are paying what they owe.
The IRS also stepped up efforts to catch offshore tax evaders in 2011, and audited 1 in 25 of those making more than $200,000 a year, rather than the 1 in 32 that were audited in 2012. If you make less than $200,000 a year, though, there is only a 1 in 98 chance that you will be audited. That means that, when you think about it, there is a fairly small chance that you will actually be audited.
All told, the IRS reports that 1.6 million tax returns (for the year 2010) were audited in 2011. It is worth noting, though, that 75% of these tax audits  were conducted through the mail. For most audits, all the IRS is looking for is documentation to prove that you are entitled to a tax deduction or tax credit. In most cases, this is handled fairly quickly and easily — as long as the person being audited has the documentation, of course.
Interestingly, the number of refunds being issued is dropping. The total number of refunds issued by the end of 2011 was 0.04% less than the number issued by the end of 2010. It’s not a big change, though. The average is also dropping. At the end of 2010, the average amount of a tax refund was $3,003, while at the end of 2011 the average refund amount had fallen to $2,913.
More taxpayers are embracing technology and convenience when it comes to filing their tax returns. There were 13.6% more e-filers by the end of 2011 than by the end of 2010. Additionally, the popularity of e-filing is increasing amongst those filing their own taxes, as well as those having professionals file for them. One of the reasons e-file is so popular is that this convenient method of filing also helps speed up the refund process.
You can also speed up the refund process if you agree to direct deposit. Have your refund directly deposited into your bank account, and, if you e-file as well, you can get your refund in as little as seven days. There were 74,590,000 direct deposit refunds in 2010, and 79,146,000 direct deposit refunds in 2011. That represents an increase of 6.1%.
Now that the 2012 tax season (for 2011 taxes) is underway, whole new numbers will be crunched, and new statistics will be released. Hopefully, you won’t be one of those that are audited. However, being part of the statistic of e-filers and direct deposit refunds might not be a bad thing at all.
(Photo: alancleaver )
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