Tax Tip #88

Concerned that the IRS will audit you? Concerned that the IRS will figure out the money you won when you hit on the score from the Super Bowl on the box that you had & you conveniently forgot to mention this to your CPA when your tax return was prepared? Want to know how long the IRS has to audit you before you are in the clear?

Normal rules: IRS has 3 years to audit an individual income tax return. 2021 tax return was filed on 4/4/2022. IRS has until 4/15/2025 to audit the tax return.

Unless the tax return omitted more than 25% of gross income from the tax return. When this is the case, the 3-year statute of limitation (SOL) extends to 6 years. 

Example: Single Taxpayer earned a salary of $80K. This taxpayer was the one who hit on the score in the box game from the Super Bowl and won 25K! Statute of limitations is 6 years for the IRS to audit this tax return since 25K is more than 25% of 80K (80K*25%=20K).

What if no tax return has been filed? The statute of limitations does not begin until a tax return is filed.



State treatment: while states like NY, NJ, CT, PA, GA, NC have the 3-year general rule, some states use 4 years such as CA.