re: #453 Hecubaās daughter
Nowadays, though, they probably have computers matching forms to records from banks, businesses, etc to detect any discrepancies: so if I withdraw less than my total RMD from my IRA/401ks, they will probably automatically send a letter challenging this failure or if I donāt report certain interest or dividend, they can detect that error and automatically send out a letter.
IRS has wage and income statements that are generated by the employers and financial institutions as a matter of course; much of what they do is matching those filings with what the employee/taxpayer is filing. Mismatches and fat fingering of data is one area that can trigger an IRS letter/response.
Audits are a deeper level where additional documentation is required. People who file certain kinds of credits/deductions are more likely to get an audit, including for the EITC. Millionaires, who have a lot of tax schemes and the tax code favors them generally, have more complex returns, so audits are more complicated and take more time. Thatās why fewer are done. It takes time and personnel to conduct those audits as compared to the EITC audits.