We thought that we'd take a minute to put together a list of the top IRS audit prone, self-employed jobs - hopefully making you think twice about trying to fool the IRS.
How did we come up with this list?
While we don't really know how the IRS audit algorithms work, we did a basic analysis of the profitable self-employed returns based on the latest available IRS data (2007 return data) and pulled out the top profitable net incomes by profession. Then, we reviewed the IRS data for returns examined and saw a correlation with the number of returns audited to profitable net income.
The Top 5 IRS Audit Prone Jobs
- Securities & commodity exchange consultant: Apparently the thirteen individuals who are making money as stock exchange consultants have a pretty profitable gig...who knew? Well, the IRS knows. The average exchange consultant reported a profit of $679,286, which puts them right in the crosshairs of the IRS inspectors.
- Dentists: Sure, dentists are well rewarded for the pain they cause everyone when it comes time for a cleaning or root canal. A dentist reports an average net profit of $122,737.
- Physicians: Think your doctor is overpaid? The average physician's office reported an income of $101,299.
- Investment banker & securities consultant: Well, we think there's enough been said about these guys. The average investment banker reported a profit of $100,779.
- Formal wear and costume rentals: We're as surprised as you are. Then again, there aren't many costs when you can rent out a $400 tuxedo for $100 a pop. These guys have an average income of $95,564.
The easiest way to make sure this doesn't happen is by hiring a great accountant to make sure that everything you're doing is aboveboard, and your books are in good order. That way, if the tax man does come knocking, you'll have nothing to fear...besides fear itself (and the dentist's drill).