Chances are that you look forward to your tax refund every spring. Maybe you use that money to use as a down payment on a new car or take your family on a vacation. You may even anticipate your employer to issue your W-2 to take to your accountant to get the process started.
However, those in the middle and lower classes have faced tax challenges in recent years. It’s often these people, rather than the wealthiest Americans, who have their taxes most closely scrutinized.
Grabbing the low-hanging fruit
A report from early October revealed that the Internal Revenue Service (IRS) audited the top-1% at the same rate as the bottom-99%. The IRS claims that auditing the less wealthy was simpler than auditing the wealthy.
Lower-level workers can handle the audits for lower-income returns but auditing returns for the wealthy requires more experienced auditors. The IRS claims that retaining senior auditors is more difficult after budget cuts in the last decade. Yes, the government audits hardworking people like you more often because it’s cheaper and less complicated.
Congresspeople quoted in the report seemed to press the IRS to focus more on the wealthy regardless of funding but time will tell if it does.
You don’t have to go it alone.
If your tax season takes a concerning turn with an audit notice, don’t panic. Facing the IRS can be intimidating but it’s important to remember that you have rights. Remember, you have the right to an attorney in the audit process, to provide your stance and evidence before they close the audit, and appeal the findings of the audit afterwards.
Knowing your rights in the event of an audit may reduce your stress and allow you to focus on putting your tax refund to good use.