1. Higher Income Taxpayers
Being part of a larger annual wage bracket certainly comes with many benefits and advantages. However, being a higher earner can also have it’s disadvantages as TaxBuzz’s Reams explains.
IRS Statistics of Income reports related to its audit activities show that audits increase as the taxpayer’s income gets higher. “In other words, the IRS audits higher income taxpayers more frequently,” Reams said. In fact, last year the IRS audited about 1% of those who brought in less than $200,000.
But the audit rate for those earning more than $200,000 was almost 4%, and for those earning $1 million or more, the audit rate was a steep 12.5%.