Tax expert: Say no to audit protection

LOUISVILLE, KY (WAVE) - It's tax time! Some of you have already filed. Others are waiting until the April 15 deadline. If your tax bill isn't adding up you might think buying audit protection is a wise investment. Since Your Money Matters, WAVE 3 News is asking the experts if that's true.

One professor said he thinks audit protection is a waste of money. Why? He says only one percent of people are audited each year by the IRS. And if you're making less than $200,000 then that percentage is even lower.

Still, that doesn't stop accountants or tax software programs like TurboTax from trying to sell you audit protection. That coverage can cost anywhere from $25 to $50 per filing. If you buy audit protection year after year and you could spend hundreds of dollars on a service you may never need or use.

Financial expert and University of Louisville faculty Jose Fernandez also says most Americans buy audit protection out of paranoia. Fernandez also said this year there's even less of a chance that you'll be audited by the IRS than ever before. That's because those same workers are busy dealing with another monumental task: monitoring President Obama's health care program.

"In January, Congress actually got the IRS's budget. So they're going to have fewer dollars to go around to actually purchase up these man hours, the workers," Fernandez said. "But second they now have to check for health insurance. So they have an extra duty they have to do along the way. So they have to verify your health insurance with fewer people."

So what do you do if you are audited? That's when Fernandez says you should look into hiring an accountant using the money you've saved by not purchasing the audit protection. He also adds that about three out of four audits are done in the mail and just involves you filling out or providing additional paperwork, something you can easily handle yourself.

After all. Your Money Matters.

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