J.D., Fredericksburg, Texas
A:It may be tempting to assume that you never have to worry about getting audited as long as you claim the standard deduction, instead of itemizing. After all, the theory goes, most people who take the standard deduction aren't the big fish with complex returns that the Internal Revenue Service is most likely to scrutinize.
But there can be many other reasons for an IRS audit.
Audits "certainly do take place for non-itemizers as well," says an IRS spokesman. "About two out of three taxpayers claim the standard deduction, but that doesn't mean there can't be other issues on a return related to various types of income—business or investment income, for example, or various tax credits claimed."
As I mentioned in a recent column, the IRS uses many filters and tests to decide which individual income-tax returns to audit. Among them is "document matching." The IRS compares information reported by taxpayers on their returns against what is reported separately to the government by employers, financial institutions and others.
If there is a significant "mismatch," or if you didn't report taxable income, be prepared for IRS questions. That's the case whether or not you take the standard deduction.
There could be many other reasons for an IRS audit. For example, the IRS might pick your return based on a tip from an informant claiming you omitted taxable income. Or small-business owners might get audited for claiming questionable business deductions on Schedule C.
Or you might get audited because you claimed a tax credit or some other benefit you aren't entitled to take. Studies have shown significant problems relating to the earned income tax credit, a program designed to help the working poor.
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