Is it true that the IRS is more likely to audit earned income tax credit claims than millionaires now? I read something about that and it seemed outrageous.

Yes, that's unfortunately accurate. EITC audits are largely automated and can be completed quickly, which makes them an easy target for meeting statistical goals. A revenue agent might complete 50-100 EITC audits in the same time it takes to thoroughly examine one complex high-wealth return. The IRS uses a cost-benefit analysis that looks at "return on investment" for audit hours. While a wealthy taxpayer audit might ultimately recover more money, the hours required are exponentially higher. Combined with the staffing shortages in specialized divisions, this creates a system where lower and middle-income taxpayers face proportionally higher audit rates than they should.

Some of the funding is supposed to go toward hiring specialized agents for high-income and business audits, but there's a huge training gap. Even if they hire people now, it takes 2-3 years to get them fully trained on complex audit issues like partnership returns and international tax. Meanwhile, experienced agents are retiring or leaving for private sector jobs that pay 2-3x their government salary.

That makes sense, but it still feels like such a fundamentally unfair system. Really appreciate the explanation! I guess we shouldn't expect this to be fixed anytime soon then.

How would you verify if the company is legitimate? I got offered something similar recently and now I'm worried.

Good question! Here are some ways to verify legitimacy: Research the company name + "scam" or "reviews" online. Check for a professional website with proper contact information, physical address, and company registration details. Be suspicious if they have no online presence or very new websites. Look them up on business registries. For UK companies, you can check Companies House (the UK's official company register). If they claim to be a registered business but don't appear in official records, that's a major red flag.

Did you have to file any special forms because the company was foreign? I'm starting something similar next month.

Does this calculation change if you have other substantial deductions already? Like if I'm already itemizing because of large charitable contributions and state taxes?

If you're already itemizing due to other substantial deductions, then the mortgage interest would provide some additional tax benefit, but the math still typically doesn't favor keeping a mortgage just for tax purposes. Let's say you already have $25,000 in itemized deductions from charitable giving and state taxes. Adding $10,000 in mortgage interest would increase your itemized deductions to $35,000, which is $7,300 more than the standard deduction for married filing jointly. At your 24% tax bracket, that additional $7,300 in deductions would save you about $1,752 in taxes. But you're still paying $10,000 in interest to get that $1,752 benefit - a net loss of $8,248. The mortgage is still costing you significantly more than you're saving in taxes.

This makes so much sense when you explain it that way. My parents have always told me never to pay off the mortgage early because of taxes, but they bought their house in the 70s when everything was different! Thank u for clearing this up!

Another accountant here - can confirm this is 100% correct. I see this misconception ALL THE TIME with clients. Being debt-free is almost always better than paying interest for a partial tax deduction. The only exception might be if you're investing the difference at a higher return, but that's a risk/reward discussion, not a tax one.

I tried creating an IRS account and they wanted me to verify my identity through ID.me which required uploading my driver's license and doing a video selfie. Is that normal or did I click on something phishy?

That's completely normal. The IRS uses ID.me as their identity verification service. They do require documents like your driver's license and a video selfie to confirm you're really you. It feels intrusive, but it's their official process to protect tax data. The alternative verification methods (like answering questions about your credit history) sometimes don't work for everyone, so the ID verification becomes necessary. Once you get through that initial setup though, accessing your tax records becomes much easier for future filings.

Wait really? So if it gets accepted anyway, there's no problem? I've been stressing for no reason?

I see this happening a lot actually. The coding on 1099-Cs is often wrong! Another common mistake is using Code B (insolvency) when it should be Code A (bankruptcy) or vice versa. Always double-check these forms because the codes determine how you'll need to complete Form 982.