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No one wants to face a tax return audit. And in fact, fewer than 2% of the more than 100 million individual tax returns filed annually ever are audited. However, the IRS counts on the ever-present possibility of an audit to make our tax system work.
The key to reducing audit risk lies in knowing which areas may cause IRS computers to select your return and in anticipating challenges in those areas.
Most returns are selected for audit through a special computer program that scores each return for audit potential. The program looks at a number of different areas, including your income level, the types of income reported, the amount of your deductions relative to your income and to the national averages, the character of your deductions and the schedules on which they are reported.
Although the IRS closely guards the specifics of the audit-screening program, the
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