What is the audit rate? Q.What is the audit rate? A.The audit rate is the percent of tax returns filed for a tax year that are ultimately examined by the IRS. About 153.9 million individual tax returns were filed based on 2018 income, but only about 520,000 of those returns were audited—an overall audit rate of 0.3 percent. Audit rates are generally highest for high-income taxpayers, taxpayers with business income, large corporations, and earned income tax credit claimants. Read more about What is the audit rate?
How does tax law allow businesses to recover the costs of capital assets? Q.How does tax law allow businesses to recover the costs of capital assets? A.Cost recovery is the ability to recover (deduct) the costs of an investment. The recovery of investments in tangible assets happens through depreciation, and the recovery of intangible assets is through amortization. Depreciation and amortization can be measured for economic, financial, or tax purposes. Read more about How does tax law allow businesses to recover the costs of capital assets?
How did the Tax Cuts and Jobs Act change business taxes? Q.How did the Tax Cuts and Jobs Act change business taxes? A.The Tax Cut and Jobs Act made significant changes to the corporate income tax and taxes on pass-through businesses. While the individual income tax provisions and pass-through provisions expire after 2025, many of the other business tax provisions are permanent. Read more about How did the Tax Cuts and Jobs Act change business taxes?