There are only two nearly sure-fire ways to reduce your chances of getting audited by the IRS: keep your taxes simple, and don't make a lot of money.
Rich people don't have that choice, of course.
People making $1 million or more were nine-times more likely to get audited in 2012 than those who make $200,000 or less, according to the Internal Revenue Service. The audit rate for people making $10 million was 24 percent in 2012, meaning that nearly one-in-four of America's superearners were audited.
Audit rates for the wealthy have gone up dramatically since 2009, when the IRS set up a special investigative team—called the Global High Wealth Group—to target wealthy tax cheats. Those $10 million-plus earners are now nearly three-times more likely to be audited than they were in 2009.
It's hard to argue with the IRS' "Willie Sutton" strategy. By going where the money is, the agency is recovering tens of billions of dollars in additional taxes.
The question for the wealthy, however, is how to avoid an audit. Even if you're honest, complex returns with big numbers are now more likely to attract the attention of IRS agents.
So here are five things that top accountants suggest the wealthy can do to try to prevent being audited:
- Avoid bad accountants. If your accountant has ever been involved with clients who have been investigated for tax fraud, or has a bad history with the IRS, stay clear. Of course, finding a full audit history of your accountant's clients is nearly impossible. But some accountants can give you a sense of their history with the IRS.
- Avoid big round numbers. If your return is filled with lots of large, round numbers, the IRS might become suspicious of their validity—especially if they are deductions. Make sure all of the reported numbers are as precise as possible.
- Be wary of big changes in income. Wild swings in reported income from one year to the next is a red flag for the IRS. Some are unavoidable—like a big, one-time capital gain. But consistency is key.
- Outliers. The IRS looks for numbers that are much larger or smaller than those for similar returns. If you have a huge deduction or itemization that's outside the normal bounds for your income group, that's a red flag.
- Avoid the word "yacht." It sounds obvious. But accountants say that any return that contains the word yacht is almost guaranteed to be audited. The challenge, of course, is what to call the business expenses for your 250-foot Feadship. Perhaps "waterborne executive office?"
—By CNBC's Robert Frank.