[motbob]

I agree with the basic premise that the IRS is nothing to be afraid of if you make a simple mistake. Though if you make a $5,000 error (which is getting out of "simple mistake" territory), they'll tack on a 20% penalty.

That being said, audits are incredibly annoying if you didn't make a mistake, especially if children are involved. The Examinations department of the IRS is hard-headed, to say the least, and they will often make any excuse to deny you credits that you are actually entitled to. In order to get a fair hearing, you have to appeal the case to court. (The U.S. has made the appeal and court processes pretty doable even for taxpayers without an attorney, though.)

[ed25519FUUU]

Even besides the risk of pecuniary damage, the problem with an audit is that it can take a long time. It's a time sink for you where the best outcome is usually nothing different happens.

[macintux]

A long time with a lot of stress, I imagine.

[moduspol]

I made an error like that one year. It was as simple as me (personally) not receiving one of the 1099s from a few months of work my wife had done for a non-profit.

For those unaware: You get a 1099 when you're paid as a contractor, which means taxes haven't been taken out yet. It's fairly common for temp work and similar oddjobs that don't warrant a dedicated employee.

There was no audit in my case. They just sent me a letter that boiled down to that I had missed that 1099, and they were correct. I was just a little miffed that they waited almost a year to send that letter, which by then had higher interest / penalties than if I had been notified sooner. Still way better than an audit would be, though.