10 Things You Always Wanted To Know About Money

1: What are your chances of being audited?

Not as high as you think. A decade ago, the IRS did audits on one out of every 94 taxpayers. By 2001, the odds slipped to one in 174. The chances that you would be hauled in for a face-to-face inquisition were even lower: one in 625.

Have the T-men lost their teeth? It's more like they've lost bodies. Even as the flood of tax returns swells, the IRS has cut 27% of its full-time jobs since 1992. The IRS Restructuring and Reform Act of 1998 obliged the agency to shift staff out of audit functions to improve customer service.

All of which has proved good news for the rich. If you've made $100,000 or more, your chances of being audited have declined by 95% since 1988. In fact, because of the oversight requirements attached to passage of the earned-income tax credit in 1996, a family that made less than $25,000 was more likely to face an audit in 2001 than their wealth-ier neighbors, according to the Transactional Records Access Clearinghouse (TRAC) at Syracuse University.

But the exact disparity depends on where those neighbors live. A high-income taxpayer in Los Angeles, for example, was nearly six times more likely to face IRS scrutiny in 2000 (the last year for which the agency released such data) than one in upstate New York or Houston. "How do you explain it? I don't know," says David Burnham, TRAC's codirector. "There were active managers and more-passive managers. L.A. had a very active manager."

- Keith H. Hammonds

2: Has everyone refinanced their house?

Just about. In 2001, roughly 47 million homes had some sort of mortgage associated with them, according to the Mortgage Bankers Association of America (MBAA). In the past two years alone -- a period that smashed all records for mortgage activity -- 16 million mortgages have been refinanced. The dollar figures are even more dramatic. The Federal Reserve says that the total outstanding mortgage debt is $5.8 trillion. MBAA says that during the past two years, $2.6 trillion in mortgage debt has been refinanced -- more than 40% of the total.

At the end of 2002, the Federal Reserve released a detailed study on the impact of refinancing on the economy, filled with dramatic, revealing data. The Fed's study, covering 2001 and the first half of 2002, concluded that between 16% and 23% of people with mortgages had refinanced during that period. Some 45% of those who refinanced took out some cash when they did -- and not trivial sums either. The average amount of cash taken out was $26,700. Perhaps the most dramatic number, though, is the Fed's calculation for total cash taken out: $132 billion, for use on everything from drapes and cruises to credit-card-debt reduction and stock-market investment.

- Charles Fishman

3: Are Swiss bank accounts overrated?

They're certainly not what they used to be. There was a time, as recently as the mid-1990s, when confidential numbered accounts offered a true veil of secrecy. "You didn't even have to be present" to open an account, says Chitra Staley, chief investment officer at financial-advisory firm Mintz Levin. "You just came up with the cash -- about $2 million if you knew someone, $5 million if you didn't -- and signed your name." Often, the name associated with a numbered account was a mere formality: "Banks didn't ask for ID," Staley says.

The days of secret numbered accounts ended, however, as pressure mounted to crack down on money laundering by arms smugglers and drug traffickers and to pay money that was being held in dormant Swiss accounts to the families of Holocaust victims. The veil of secrecy has been shredded further with fears of money laundering for terrorists.

Nowadays, many private banks require 1 million Swiss francs (about $700,000) to open an account. But you may have to fork over more information than you do to get a U.S. passport: your (real) name, date of birth, profession, contact information, type of currency to be held in the account, expected types of transactions, and, most important, the economic origins of the money to be deposited.

As for privacy? Swiss bankers still adhere to the highest standards of confidentiality, facing steep fines and prison time for betraying their clients. But the Swiss government now has treaties with the United States and other foreign governments to lift that policy if bank or government authorities even suspect that the money in an account comes from criminal dealings. The good news for fugitives from the IRS is that tax evasion isn't considered a crime in Switzerland (although tax fraud is).

- Alison Overholt