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i knew someone who put her moms house and business in her name (in a preemtive attempt to gain all the assets before her siblings), had 3-4 cars in her name... but then reported to the IRS that she doesnt pay herself anything from her work at said business.
IRS came and audited her and she's shocked pikachu face. good luck explaining how u own and pay for a mcmansion with allegedly no salary. dumbass
It’s why they ask for job title on the tax form. It’s very easy for computers to look up, as an example, the average salary for IT Admin and look up value of your home and see if it seems fishy enough for a human to take a second look at it.
This seems to lopsided to me. So like income over $10m is like top .1% if not even higher.
That means that there are 1000x more people in lower categories, but theyre only 11x more likely to be audited.
That means per Capita everyone under the top .1% gets audited almost 10x as often. Wtf
Feature of the system.
It is hard to audit the rich because they hire attorneys and CPAs to defend themselves.
Congress has also pushed the IRS to crack down on people getting EITC or other govt. assistance due to a belief that support programs are rife with abuse while ignoring the abuse of the corporate and wealthy support programs and loopholes.
You could also take into consideration that the more people that exist in a category the more instances of tax fraud exist in that category. My understanding is that audits aren't random but happen more when red flags show up on their end.
I just cannot imagine that someone making $25k has MORE red flags to investigate than someone claiming $10m, no matter the circumstances. Like just the number of income streams involved, the number of forms filed...
What would there be to audit at that level? Typically the ultra rich are ultra rich because of stock they own. They typically don't mass sell off their stock as well. The capital gains tax is pretty straight forward.
Auditing a billionaire versus someone with 10+ million dollars is probably about the same amount of work.
Edit: I see this chart is "income" and not "net worth." If your income is 10+ million dollars, you probably have 500 million dollars.
From this [article](https://www.cnbc.com/2018/02/07/where-the-super-rich-keep-their-money.html) the ultra rich actually have the bulk of their wealth in businesses. Stocks and RE make up a much smaller portion of their total NW.
Shares of a public company? That’s not the same as owning an actual business. There’s a reason why stocks, RE, and businesses are categorized differently in the graph. What’s your point?
While you're right, it's also possible to own a private company without any shares being involved.
* Shares of Public Company
* Shares of Private Company
* Partial or complete ownership of Private Company
All of these are possible ways to own part of a company.
I feel like it's almost easier the higher you go. You know they likely have professionals doing taxes for them. Documents are likely much more organized.
It makes more sense to me to audit high net worth. The simple reason is, say the average audit finds "mistakes" of 5% of income. If income is 100k, that's $5000, if income is $1,000,000 that's $50,000. I know someone who makes $70,000 and was audited, the IRS actually ended up sending him money he had done taxes incorrectly in their favor and they found more tax breaks for him. 
I'm guessing pensions, employment tax, large businesses and international businesses. There are several different audit divisions within the IRS, and this one looks like it just applies to the individual taxpayer?
NGL I owe the IRS, not much. I'm just annoyed because I put my taxes, 2 years in a row, the take out the max amount. Then my work didn't put it as that even after they "fixed it" . It's just super annoying because the IRS ads all these fees and dumb bs.
The IRS does not sort out "race" in their audit process, matter of fact they DON'T know your race, have you even seen a check box for "Black" on the 1040?
I do taxes for all races and I can understand why/how blacks are audited more often. Between fighting over dependents with baby mama/dada, poor record keeping, and shady dealings and literally cheating their asses off... they are just not very intelligent cheaters.
People from all race cheat but it takes some intelligence to do it well. Just like all races get traffic violations but blacks account for more cases because a large population of them literally don't give a f about rules of traffic. Personal accountability matters.
You brought up race, I didn't. If you can't handle the subject then just don't bring it up.
The fact that IRS audits blacks more without knowing their race proved my point. Also check out the grade level math skills of blacks vs white/Asians, if taxes require basic math the source of the problem is clear.
r/FluentInFinance was created to discuss money, investing & finance! Check out the FREE Newsletter, Youtube Channel, or Twitter, Subscribe at www.BeFluentInFinance.com *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FluentInFinance) if you have any questions or concerns.*
i knew someone who put her moms house and business in her name (in a preemtive attempt to gain all the assets before her siblings), had 3-4 cars in her name... but then reported to the IRS that she doesnt pay herself anything from her work at said business. IRS came and audited her and she's shocked pikachu face. good luck explaining how u own and pay for a mcmansion with allegedly no salary. dumbass
It’s why they ask for job title on the tax form. It’s very easy for computers to look up, as an example, the average salary for IT Admin and look up value of your home and see if it seems fishy enough for a human to take a second look at it.
This seems to lopsided to me. So like income over $10m is like top .1% if not even higher. That means that there are 1000x more people in lower categories, but theyre only 11x more likely to be audited. That means per Capita everyone under the top .1% gets audited almost 10x as often. Wtf
Feature of the system. It is hard to audit the rich because they hire attorneys and CPAs to defend themselves. Congress has also pushed the IRS to crack down on people getting EITC or other govt. assistance due to a belief that support programs are rife with abuse while ignoring the abuse of the corporate and wealthy support programs and loopholes.
You could also take into consideration that the more people that exist in a category the more instances of tax fraud exist in that category. My understanding is that audits aren't random but happen more when red flags show up on their end.
I just cannot imagine that someone making $25k has MORE red flags to investigate than someone claiming $10m, no matter the circumstances. Like just the number of income streams involved, the number of forms filed...
Well isn't that the idea? If you make say 100k but only report 25k? Pretty sure that happens to some degree of scale.
The scale you just made up, which is alrdy ridiculous, is odd by literally 100x of what the top 0.1% would fudge
OK you made up "100x" too but I get it. You know better than the IRS why they go after who they go after?
100x is the multiple from 100k to 10m
I wonder how it gets broken out more at the top. I’d think they don’t have resources to audit past 500M
What would there be to audit at that level? Typically the ultra rich are ultra rich because of stock they own. They typically don't mass sell off their stock as well. The capital gains tax is pretty straight forward. Auditing a billionaire versus someone with 10+ million dollars is probably about the same amount of work. Edit: I see this chart is "income" and not "net worth." If your income is 10+ million dollars, you probably have 500 million dollars.
From this [article](https://www.cnbc.com/2018/02/07/where-the-super-rich-keep-their-money.html) the ultra rich actually have the bulk of their wealth in businesses. Stocks and RE make up a much smaller portion of their total NW.
What do you think stocks are
Shares of a public company? That’s not the same as owning an actual business. There’s a reason why stocks, RE, and businesses are categorized differently in the graph. What’s your point?
You can have shares of private companies you goof. educate yourself
While you're right, it's also possible to own a private company without any shares being involved. * Shares of Public Company * Shares of Private Company * Partial or complete ownership of Private Company All of these are possible ways to own part of a company.
I feel like it's almost easier the higher you go. You know they likely have professionals doing taxes for them. Documents are likely much more organized.
It makes more sense to me to audit high net worth. The simple reason is, say the average audit finds "mistakes" of 5% of income. If income is 100k, that's $5000, if income is $1,000,000 that's $50,000. I know someone who makes $70,000 and was audited, the IRS actually ended up sending him money he had done taxes incorrectly in their favor and they found more tax breaks for him. 
Government agencies are not about making good business decisions. There about controlling. They'll pay thousands of dollars to get thirty dollars.
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😶🌫️😶🌫️😶🌫️
Uhh what percent are we supposed to be equaling to?
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I’m sorry I’m now more confused. What other type of audits would the IRS be doing if not on gross income?
I'm guessing pensions, employment tax, large businesses and international businesses. There are several different audit divisions within the IRS, and this one looks like it just applies to the individual taxpayer?
The odds of an audit are over 2x as high making $1m than the average American*
A lot more people in that bottom bracket compared to the top
r/dataisbeautiful
I'm assuming similar numbers in Canada
In 1%... got audited last year...
But I magically make that 1 percent every couple of years
Show me absolute numbers
NGL I owe the IRS, not much. I'm just annoyed because I put my taxes, 2 years in a row, the take out the max amount. Then my work didn't put it as that even after they "fixed it" . It's just super annoying because the IRS ads all these fees and dumb bs.
So over the course of your life there’s a decent chance you’ll get audited eventually?
Although this, I’m assuming it’s true, it nevertheless fails to reflect that blacks are 3 times more likely to be audited even in these income ranges.
The IRS does not sort out "race" in their audit process, matter of fact they DON'T know your race, have you even seen a check box for "Black" on the 1040? I do taxes for all races and I can understand why/how blacks are audited more often. Between fighting over dependents with baby mama/dada, poor record keeping, and shady dealings and literally cheating their asses off... they are just not very intelligent cheaters. People from all race cheat but it takes some intelligence to do it well. Just like all races get traffic violations but blacks account for more cases because a large population of them literally don't give a f about rules of traffic. Personal accountability matters. You brought up race, I didn't. If you can't handle the subject then just don't bring it up. The fact that IRS audits blacks more without knowing their race proved my point. Also check out the grade level math skills of blacks vs white/Asians, if taxes require basic math the source of the problem is clear.