7 Tax Audit Red Flags

An unexpected letter from the Internal Revenue Service can make your stomach drop, but you can take steps to reduce your audit risk.

Taxpayers overall face a low audit risk: The IRS audited 1.1% of all individual tax returns filed in 2010, or 1.6 million returns of 141 million filed.

The vast majority of those audits — 1.2 million — were done by mail. Just 392,000 involved an in-person meeting with the IRS. That’s not necessarily good news. Taxpayers often are confused by IRS correspondence and with such audits don’t have the benefit of working with one single agent, the National TRaxpayer Advocate says.

Read the full story.

[Related: Best Ways to Cut Your Tax Bill]

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