Tax Tip for Spring 2004
Average Itemized Deductions & Audit Risk Stats
Average itemized deductions
This chart shows the average itemized
deductions of taxpayers for the tax year 2002 for interest, taxes, medical
expenses and charitable contributions. While it may be interesting for those who
itemize their deductions to compare them with these average figures, the chart
should not be considered as indicating amounts that would be allowed by the IRS.
Taxpayers must be able to substantiate claimed itemized deductions.
2002 Average Deductions Claimed Based on Adjusted Gross Income (AGI) AGI in Thousands of Dollars AGI $0-15 $15-30 $30-50 $50-100 $100-200 $200 & up Medical 7,400 5,890 4,994 5,672 10,969 28,305 Taxes 2,237 2,327 3,187 5,173 9,785 35,815 Contri- butions 1,423 1,890 2,006 2,530 3,875 17,354 Interest 7,043 6,453 6,850 8,364 11,825 21,998
What are the chances of being examined?
A total of 849,296 individual income tax returns
were audited during fiscal year 2003 out of a total of almost 130 million
returns that were filed in calendar year 2002. This works out to about 0.65% of
the individual returns that were filed. In the prior fiscal year, the audit rate
for individual returns was about 0.57%.
Year-over-year, the number of corporations
audited dropped by more than 10%, from 34,744 in 2002 to 30,428 in 2003. Only
0.58% of corporations with assets under $10 million were audited; for
corporations with assets of $10 million or more the rate was 12.08%. For S
corporations, the audit rate was 0.30%.
The following table shows the chances of being
examined in fiscal year 2003 as compared to fiscal year 2002. The figures
include correspondence examinations, office examinations and field examinations.
The data is classified by types and amounts of income, type of returns, etc. The
percentage of returns examined is shown separately for each category based on
the number of returns filed in that category.
Percentage of
returns audited
2003 2002
Individuals--Nonbusiness
(based on total
positive income(TPI))
Under
$25,000 1.09 0.64
$25,000 to under
$50,000 0.30 0.23
$50,000 to under
$100,000 0.41 0.28
$100,000 and
over 0.98 0.75
Individuals filing
Schedule
C showing gross
receipts
as indicated
Under
$25,000 3.00 2.67
$25,000 to under
$100,000 1.33 1.18
$100,000 and
over 1.47 1.45
Individuals filing
Schedule F
showing gross
receipts
as indicated
Under
$100,000 0.57 0.47
$100,000 and
over 0.78 0.72
Fiduciary (Estate
and Trust Income)
0.17 0.18
Corporation
(based on assets)
Under
$10,000,000 0.58 0.63
$10,000,000 and
over 12.08 14.17
S Corporations
0.30 0.39
Partnerships
0.35 0.26
What's coming. The Inspector
General's report indicates that IRS plans to hire additional audit personnel in
fiscal years 2004 and 2005. However, the report cautions that the impact of
these new hires will not be realized immediately. The new hires need to be
trained and experienced examiners need to be taken away from their duties in
order to provide the training.
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