Tax audit odds are low, but if it happens be prepared

Photo by Will Keightley via Flickr CC

Afraid you'll face an Internal Revenue Service audit? Don't bet on it, says a veteran oddsmaker.

The tax audit odds for 2019 will be approximately 1 in 172, says SportsInsider.com's James Murphy, a sportsbook consultant and specialist in novelty betting odds.

25% of filers worry about audits: That slim audit possibility, however,  didn't seem to affect folks who participated in a LexingtonLaw survey conducted before this tax season started.

The Salt Lake City-based law firm found that a quarter of Americans are afraid they'll be audited.

Older filers are more worried. Thirty-three percent of those older than 65 are concerned about a possible tax audit.

And in an apparent flip of gender worry roles, men who participated in the survey were 12 percent more fearful of an IRS follow-up than women.

Not to worry, at least not so much: Murphy, however, says we all should chill. Americans are much more concerned than we should be about tax audits.

Thanks to a confluence of factors, including budget cuts for the IRS, the odds of being audited by the IRS had dropped from 1 in 90 at the peak in 2010 and 2011 to around 1 in 160 last year, says Murphy.

And while the actual number of federal tax audits varies from year, Murphy's projections suggest that this year the chances that the IRS will take a closer, second look at your 1040 are even lower. Specifically, the aforementioned 1 in 172.

To give us non-bettors a better idea of what that means, Murphy compiled the following table that compares the odds of being audited by the IRS to an assortment of other random life events:

Wow. I'm never going to scoff at bowlers again!

Specific IRS audit odds: If you do happen to unluckily fall into that audit category, Murphy also has calculated the odds of what probably caught the IRS' attention in his 2019 IRS income tax audit odds.

The odds that an individual will be subject of a federal tax audit if he or she:

Murphy also points out that anyone's true odds of an IRS audit are dependent on a number of variables, many of which are discussed in his SportsInsider.com article and my post on 10 tax audit triggers.

Dealing with an audit: Sometimes you beat the odds. Sometimes they beat you. When it comes to an audit, though, here are some things you can do to improve your chances.

The bottom line, betting and otherwise, is to fill out your returns on time — that's April 15 for most of us, just a week from today! — and as completely as you can.

Don't ignore any notices from the IRS when it has questions about your filing.

Have good documentation to support your Form 1040 entries.

And if you're confused or concerned about any of the IRS inquiries, hire a tax professional who's experience in the audit process.

Heck, hire a tax pro to handle your audit even if you're confident you can answer the IRS questions. If you've never been though an audit before, you're probably not as ready to deal with it as you might think.

Finally, don't panic.

Audits aren't fun, but if are one of the few who has to face one, being prepared is your best chance of satisfying any IRS questions without additional damage to your bank account.

You also might find these items of interest:

• Do you live in a tax audit hot spot?
• If IRS asks, you've got some 'splaining to do
• IRS audit interest piqued by DIFferent deduction amounts

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