How common are tax audits?

[VagabondMD]

The White Coat Investor wrote:

I wonder how many blog posts I can get out of an audit.

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The over and under is 7.5.

[Craigy]

Sj wrote:

I think turbotax offers some kind of ultimate audit protection with a CPA if you are audited for an extra price (like $80 or something)…

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Always wondered what that entailed.

[socaintexas]

Last year I paid my CPA $347. He hasn't finished them yet this year. I am a W2 employee with some 1099 work. My husband does horse/cattle stuff so we have a farm exemption. I don't think they are too complicated but when I told him next year we will have to do the paperwork for a backdoor Roth he developed a blank stare!

[jfoxcpacfp]

socaintexas wrote:

Last year I paid my CPA $347. He hasn’t finished them yet this year. I am a W2 employee with some 1099 work. My husband does horse/cattle stuff so we have a farm exemption. I don’t think they are too complicated but when I told him next year we will have to do the paperwork for a backdoor Roth he developed a blank stare!

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Are you sure you paid $347 to a CPA? That may explain the blank stare. Those prices are more typical of seasonal tax preparers - that rate might even cause HRB to give you a blank stare  

[VagabondMD]

Craigy wrote:

Sj wrote:

I think turbotax offers some kind of ultimate audit protection with a CPA if you are audited for an extra price (like $80 or something)…

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Always wondered what that entailed.

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Same here. I regularly purchased it when I used TurboTax but had little expectation for a full-on defense. My guess is that it was a cursory evaluation which would lead to a more traditional relationship for the typical cost of the audit. IIRC, the cost was more like $30-50, but perhaps it has changed. I considered it like bringing an umbrella to ward off the rain.

[jfoxcpacfp]

Vagabond MD wrote:

Craigy wrote:

Sj wrote:

I think turbotax offers some kind of ultimate audit protection with a CPA if you are audited for an extra price (like $80 or something)…

Click to expand…

Always wondered what that entailed.

Click to expand…

Same here. I regularly purchased it when I used TurboTax but had little expectation for a full-on defense. My guess is that it was a cursory evaluation which would lead to a more traditional relationship for the typical cost of the audit. IIRC, the cost was more like $30-50, but perhaps it has changed. I considered it like bringing an umbrella to ward off the rain.

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Only a CPA, attorney, or EA has unlimited representation rights before the IRS. I would be extremely uncomfortable being represented in even a limited capacity by HRB. This is an interesting article promoting representation by a tax attorney. Not necessary in most cases, but when you need one, you shouldn't try to cut corners.

[Antares]

I pay my CPA about $2500 (in Manhattan) for tax prep and tax-related issues year round. This includes 4 Schedule C's and my college kid's return. It's pricey, but I would NOT rather do it myself. I also have bought the idea that I'm less likely to get audited if she does it, for various reasons.

[janettebournes]

I have purchased the tax audit protection from turbotax in the past as well as per sj's post

I am fortunate to say I haven't needed their expertise in fighting an audit

I did not purchase the package this year as my income has grown to the point where I got phased out of even itemized deductions and just took the standard deduction (dual w2s for my husband and myself with no other complicating factors)