If you live in Mississippi, consider giving your tax return an extra look before you hit the send button. The state has the highest audit rate in the country, according to a recent study published in the journal Tax Notes.
Mississippi probably seems like an unlikely candidate for so many audits. But study author Kim M. Bloomquist found that audits are especially high in many parts of the Magnolia State because many citizens there are poor and thus claim the earned income tax credit (EITC).
This credit is designed to help working people with low to moderate income, according to the IRS. To claim it for 2018, your adjusted gross income must be less than a range of qualifying amounts from $15,270 to $54,884, depending on your tax filing status and the number of qualifying children claimed.
According to a ProPublica summary of Bloomquist’s research, the high number of audits in Mississippi is the result of “pressure from congressional Republicans to root out incorrect payments of the credit.”
Mississippi’s Humphreys County is ground zero for this effort, ProPublica reports. It is the most audited county in the nation. More than half of taxpayers in the county claim the EITC.
According to ProPublica:
“The five counties with the highest audit rates are all predominantly African American, rural counties in the Deep South. The audit rate is also very high in South Texas’ largely Hispanic counties and in counties with Native American reservations, such as in South Dakota. Primarily poor, white counties, such as those in eastern Kentucky in Appalachia, also have elevated audit rates.”
This is not the first time the IRS has been accused of targeting a specific group of taxpayers. Several years ago, the agency was embroiled in controversy for “heightened scrutiny” of requests for tax-exempt status from organizations with conservative political leanings.
The IRS eventually apologized for that.
How to avoid an IRS audit
Regardless of where you live — and which credits you claim — you can reduce your odds of being audited by taking a few simple steps.
For example, trying to hire tax preparation on the cheap might backfire and get you audited, as we have reported in “Tax Hacks 2019: 6 Missteps That Will Get You Audited.”
If you’re retired, you may face additional audit risks. To learn more about these potential pitfalls, read “Retirees, Beware These 7 Tax Audit Red Flags.”
Have you ever been audited? What advice would you give to others to help them avoid that fate? Share your tips in comments below or on our Facebook page.