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There’s a barbell audit pattern across the income spectrum due to the kinds of credits, deductions and strategies that show up at different levels.
Those earning up to $25,000 annually are about five times more likely to get audited than taxpayers in the $25,000 to $1 million range, according to Syracuse University’s, Transactional Records Access Clearinghouse.
That is because many lower-income folks are eligible for the earned-income tax credit, which the IRS believes is the source of some $17 billion in unwarranted annual claims.
At the other extreme, taxpayers with more than $1 million in income have an average audit rate of 2.2%, the highest of any segment, according to TRAC. The IRS says that is because higher-income tax returns are more likely to use more complex tax strategies.
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