Key Takeaways. Your tax returns can be audited even after you've been issued a refund. Only a small percentage of U.S. taxpayers' returns are audited each year. The IRS can audit returns for up to three prior tax years and, in some cases, go back even further.
No. Checking to see if you have received your refund does not trigger an audit. But there are many other factors that can lead the IRS to take a closer look at your return – such as math errors, failure to report income, or too many deductions claimed.
Failing to report all of your income on your tax return is a top audit trigger. That's because income that goes unreported on your tax return also goes untaxed. The IRS receives copies of your W-2 and 1099 forms and will automatically check to see that your reported income matches up.
The IRS usually starts these audits within a year after you file the return, and wraps them up within three to six months. But expect a delay if you don't provide complete information or if the auditor finds issues and wants to expand the audit into other areas or years.
Returns with extremely large deductions in relation to income are more likely to be audited. For example, if your tax return shows that you earn $25,000, you are more likely to be audited if you claim $20,000 in deductions than if you claim $2,000.
No. Once your return is accepted by the IRS, it can't be rejected. If anything, they may send a letter or notice requesting additional support if needed. The IRS operations are limited during the Covid-19 pandemic.
IRS Notification
You'll likely receive a letter in the mail notifying you of the error, and the IRS will automatically adjust it. If, however, your mistake is more serious -- such as underreporting income -- you could be headed for an audit. Many audits start with a letter requesting more information or verification.
In most cases, a Notice of Audit and Examination Scheduled will be issued. This notice is to inform you that you are being audited by the IRS, and will contain details about the particular items on your return that need review. It will also mention the records you are required to produce for review.
If your tax return is selected for an audit, you will be notified by the IRS by mail. The IRS does not place phone calls or send e-mails to notify the taxpayer of an audit review.
Audit trends vary by taxpayer income. In recent years, IRS audited taxpayers with incomes below $25,000 and those with incomes of $500,000 or more at higher-than-average rates. But, audit rates have dropped for all income levels—with audit rates decreasing the most for taxpayers with incomes of $200,000 or more.
What is the chance of being audited by the IRS? The overall audit rate is extremely low, less than 1% of all tax returns get examined within a year. However, these nine items are more likely to increase your risk of being examined.
If the IRS finds that you were negligent in making a mistake on your tax return, then it can assess a 20% penalty on top of the tax you owe as a result of the audit. This additional penalty is intended to encourage taxpayers to take ordinary care in preparing their tax returns.
The IRS does check each and every tax return that is filed. If there are any discrepancies, you will be notified through the mail.
Remember, you will be contacted initially by mail. The IRS will provide all contact information and instructions in the letter you will receive. If we conduct your audit by mail, our letter will request additional information about certain items shown on the tax return such as income, expenses, and itemized deductions.
What happens if you get audited and owe money? If you get audited by the IRS and owe money, you'll be notified of the additional tax that you're required to pay as well as any penalties and interest due. The correspondence that you receive from the IRS will mention a deadline by which you must pay.
BFS will notify the IRS of the amount taken from your refund once your refund date has passed. You should contact the agency shown on the notice if you believe you don't owe the debt or if you're disputing the amount taken from your refund.
This is most easily observed by looking at Tax Year 2019 which is presented in the FY 2021 Data Book with audit results as of September 30, 2021. Tax returns for 2019 are filed in 2020 and may be filed on extension as late as October 15, 2020.
The IRS issues more than 9 out of 10 refunds in less than 21 days. However, it's possible your tax return may require additional review and take longer.
You cannot go to jail for making a mistake or filing your tax return incorrectly. However, if your taxes are wrong by design and you intentionally leave off items that should be included, the IRS can look at that action as fraudulent, and a criminal suit can be instituted against you.
If you do need to make a correction, file an amended tax return, also known as a Form 1040-X. You can use a 1040-X to submit additional or updated information to the IRS and to attach another form to your tax return. Pay any additional tax owed as quickly as possible to avoid accruing interest.
A careless mistake on your tax return might tack on a 20% penalty to your tax bill. While not good, this sure beats the cost of tax fraud -- a 75% civil penalty. The line between negligence and fraud is not always clear, however, even to the IRS and the courts.
After tax filing begins, e-filed returns generally sit in Pending status for 24-48 hours before being reported back as either Accepted or Rejected.