Tax Day is just around the corner - here are the odds you will be audited based on your income

While the odds of getting audited by the IRS are low, Americans with certain incomes are more likely than others to face closer examination. 

Ultra-wealthy taxpayers with annual incomes exceeding $10 million are the most likely to face scrutiny from the IRS, most recent available data from the agency shows. 

But the second most likely group are those who claim a particular credit - who tend to be low and moderate-income taxpayers. 

Taxpayers who claim the Earned Income Tax Credit - a tax break for those earning below a certain threshold - are more than twice as likely as others to get audited, according to data reported by CBS. 

It comes after the IRS pledged to increase the number of audits for Americans earning more than $400,000 a year in a bid to crack down on tax dodgers. 

Taxpayers who claim the Earned Income Tax Credit - a tax break for those earning below a certain threshold - are more than twice as likely as others to get audited, IRS data shows

As part of new efforts under the Biden Administration's landmark Inflation Reduction Act, the IRS also vowed to 'add new fairness safeguards' for those claiming the EITC. 

'Audit rates of those receiving the EITC remain at high levels in recent years while rates dropped precipitously for those with higher income, partnerships and others with more complex tax situations,' the agency said in a statement in September last year. 

While the majority of tax returns are accepted, some face closer inspection from the IRS in the form of an audit. This is to check whether income, expenses, credits and deductions have been reported correctly - and to help deter tax fraud. 

According to latest IRS data from the 2020 tax year, only 0.2 percent - or around 1 in 500 - of all individual income tax returns triggered an audit, CBS reported. 

Of taxpayers earning more than $10 million a year, 2.4 percent of returns were audited that year - the highest of any income group. 

The data showed that among those in the lowest bracket - earning between $1 and $24,999 a year - 0.4 percent of people were audited in 2020. 

But the figure soared to 0.9 percent among those who claimed the EITC tax credit. 

The EITC is a tax break for low and moderate-income workers. In general, the less you earn, the larger the credit - and it also depends on tax filing status and the number of children people have. 

Ultra-wealthy taxpayers with annual incomes exceeding $10 million are the most likely to face scrutiny from the IRS

For example, for returns filed this year, a single taxpayer with no kids earning $17,640 or less will receive a maximum credit of $600. 

A married couple filing jointly with three kids and less than $63,398 in income, meanwhile, can claim $7,430 - the maximum EITC amount.

The reason EITC returns can get flagged is if IRS records show that the taxpayer does not qualify for all or some of the credit, CBS reported, such as claiming a child who is not actually eligible. This can happen if they are over 19, for example, or not a full-time student. 

About 8 in 10 audited returns that claimed the EITC had either incorrectly claimed a child or misreported income, according to a 2022 report from the National Taxpayer Advocate.

According to the Bipartisan Policy Center, these are often 'honest mistakes' made by individuals confused by the credit's complicated eligibility rules.

It said the average audit of an EITC recipient can be closed in five hours - whereas scrutiny for high-income tax returns are far more complex. 

The Bipartisan Policy Center also noted that audit rates for those who claim the EITC  tend to disproportionately fall on marginalized groups, partly because they are more likely to qualify for the credit.

The IRS has pledged to increase the number of audits for Americans earning more than $400,000 a year in a bid to crack down on tax dodgers (Pictured: Commissioner Danny Werfel)

Americans are much less likely to get audited than they were historically, IRS data shows. 

For example, the agency scrutinized around 9.4 percent of all tax returns for people earning a yearly salary of more than $10 million in 2014 - which is almost four times the current rate. 

'The years of underfunding that predated the Inflation Reduction Act led to the lowest audit rate of wealthy filers in our history,' IRS Commissioner Danny Werfel said in September.  

'I am committed to reversing this trend, making sure that new funding will mean more effective compliance efforts on the wealthy, while middle- and low-income filers will continue to see no change in historically low pre-IRA audit rates for years to come.'

With the federal deadline for income tax returns just around the corner, experts have flagged what Americans should look out for in order to lower their changes of facing an audit. 

These include missing income, unusual income and overstating business deductions.  

Another of the biggest IRS red flags is math errors on a return. In the fiscal year 2022, the agency issued close to 16 million math error notices.