IRS Audits for Non-Itemizers: What You Need to Know

Many taxpayers wonder if they can be audited by the IRS if they don't itemize their deductions. The answer is yes, they can. However, the likelihood and specific scenarios of being audited largely depend on your tax situation.

IRS Audits and Non-Itemizers

It's important to understand that the IRS doesn't simply target those who claim itemized deductions for audits. They can audit anyone, and this is especially true if there are discrepancies that they suspect. For example, there was a time when an auditor thought that a taxpayer had failed to report some income.

The taxpayer was able to demonstrate that the income had been reported elsewhere. This example underscores the need for thorough record-keeping for any financial transactions.

Proof of Dependents and Credits

To illustrate the potential reasons for an audit, let's delve into the case of claiming dependents and credits. The IRS frequently scrutinizes individuals who claim the Earned Income Tax Credit (EITC), the American Opportunity Credit (AOC), or the Additional (Refundable) Child Tax Credit (CTC).

Proving Your Dependents

If you claim dependents, be prepared to provide documentation to prove their relationship and residency. This includes:

Birth certificates for proof of relationship and age Social Security cards or Numbers (SSN) to verify eligibility for the EITC Medical records or insurance coverage statements for health-related requirements School records to confirm residence and education status

Note that for the AOC, you will also need Form 1098T, which is issued by the educational institution attended by or on behalf of your dependent student. In cases where the parent does not live with the child but provides for them, the non-custodial parent must obtain a signed Form 8332 from the custodial parent, and in some cases, even a court order.

Claiming the EITC and CTC

While the non-custodial parent can technically claim the child as a dependent, they do not qualify for the EITC. However, they can still claim the CTC for the child.

Non-Itemizers and IRS Audits

So, what if you only take the standard deduction and have no dependents or itemized deductions? In that case, you are generally not at risk of being audited by the IRS.

To summarize, while it's possible to be audited if you don't itemize, the likelihood is lower for those who only take the standard deduction. However, thorough record-keeping and accurate documentation of dependents and credits are crucial for any taxpayer.

For more information on tax audits and to ensure compliance with IRS regulations, consult a tax professional or the official IRS website.