IRS Lifestyle Audits

[Rick Bradd]

Just had an interesting conversation with my CPA, he says he has never had as many audits ordered this month, and he has been doing taxes for over 20 years. Basically, the IRS is interested in how filers with low earnings are showing such high mortgage interest write offs.

A lot of his clients are investors, who may have had a great income year in 2011, or a large capital gain, and then they sat on the sidelines in 2012. Thus they may show an income of 50k, yet 15k in mortgage interest deductions, for example.

I asked him if it was a regional thing or only in Southern California and he said no, the IRS let it be known they are just intensifying examination of interest deductions versus income to see if there is a trend or some such thing. I forgot to ask him if these was a certain ratio that triggered it.

Alas, it does not affect me in any way, I only wish I had that problem. But I thought I would share just in case anyone might find it interesting....................
Rick

[Ned Carey]

I wonder if any of the IRS morons ever figured that high the record high foreclosure rates would obviously coincide with high mortgage interest debt to income ratios?