How are tax returns chosen for audit?

Posted By: Dr. Frugal in Taxes on 08/04/2007 at 21:02:12

The IRS uses something called the DIF--the discriminant function system, which assigns a score to key elements on your return. If the total score for your entire return is greater than the IRS guidelines, then computer will kick your return out for review by an official IRS agent. If the agent feels your return should be audited after reviewing it, you'll be contacted. A very small percentage of returns (less than half a percent) are chosen completely at random. There's nothing you can do to reduce your chances except to file close to the filing deadline rather than early. There's some rumor and speculation that people who file early may have a greater chance of being randomly selected for audit.

For everything you wanted to know about income tax, check out the IRS's user-friendly site at IRS.gov. Most of the pages are available in both HTML and PDF so you can download and read them at your leisure.

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