10 Tax Refund Myths


Once I receive my refund, I'm safe from audit

Think again. All a refund means is that the Internal Revenue Service (IRS) has reviewed your tax return and agreed with your calculations. Deciding who to audit is another matter and is determined long after your refund check is received.

Here's how they decide if you're one of the "lucky" ones: After your refund is paid (assuming one is due), the IRS sends your return through a computer check that compares it to a computer model. It's then given a DIF (Discrimination Information Function) score. The formula for calculating the DIF score is closely guarded by the IRS, but is based on factors such as, for example, the average amount of charitable deductions claimed by a person earning the same salary as yours. If your return receives a high score, an agent reviews it. Those with the greatest potential of yielding more taxes, interest or penalties are audited [source: Lewis].

Although the audit process generally begins three to four months after the filing deadline, the IRS can audit a return up to three years after it is received. But don't' worry too much. Your chances of being audited are slim. If you make less than $25,000, you have less than a 1 percent chance of being audited; if you make more than $100,000, your chances are still less than 2 percent [source: Lewis].