The IRS Cracks Down on Millionaires...And You!

Today CNN Money has an interesting story about the IRS Cracking Down on Millionaires. The common believe is that the IRS goes easy on high income taxpayers, and drills down with no mercy on the little guys: the small business owners, the regular folks like you and me. Well, new numbers paint a different story.

The New IRS Unit

Last year, the IRS launched a new unit for monitoring high income taxpayers called the Global High wealth Industry Unit. From all the effort this took, it's clear the IRS has watchful eye on high income taxpayers.

Millionaire Audits Increase

There's been a significant increase of audits for very high income taxpayers over the last year. Look at the numbers:

- Taxpayers earning $10 million or more saw a 73% increase

- Those between $5 million and $10 million saw a 54% increase

- Taxpayers earning over $1 million saw a 15% increase

Audit Increases Across the Board

It's clear that high income taxpayers were hit hard last year, but IRS enforcement was boosted across the board. The IRS audited 4.58 million tax returns last year, and the trend continues to increase.

Prevent an Audit This Year
To be honest, your chances of being audited are slim. As long as you properly file your taxes and only claim deductions you qualify for, you should be safe from an audit.

Keep Your Records and Receipts

Keep your receipts and important documents on file for seven years, just in case the IRS decides to investigate or asks for further documentation. IRS Audits are still relatively rare compared to the amount of people who file each year, but they have doubled since 2001!