No one wants to hear from the IRS after filing their taxes, especially when it involves the word “audit.”
While audits are relatively rare, certain tax return entries or patterns can raise a red flag and increase your chances of being audited.
In this post, we’ll break down the 7 most common IRS audit triggers and how to avoid them.
Explore more in this After-Filing IRS Series →
After You File: IRS Refunds, Notices, and Audits (Coming Soon)
├─ IRS Refund Tracker Guide, Avoid Delays
├─ Why Is Your Tax Refund Delayed
├─ Direct Deposit vs Paper Check: Which Is Faster
├─ Tax Refund Smaller Than Expected?
├─ How to Respond to an IRS Letter or Tax Notice
├─ IRS Identity Verification Guide: IRS Identity Theft Victim?
├─ Got a CP2000 From the IRS? What It Means and Exactly How to Handle It
├─ Disagree with an IRS Notice? How to Appeal with Sample
└─ ✅ What Triggers an IRS Audit? 7 Common Red Flags (You are here)
What Is an IRS Audit?
An IRS audit is an official review of your tax return to verify the accuracy of your reported income, deductions, and credits.
It doesn’t always mean you’ve done something wrong, but it does mean the IRS wants more details.
Audits can be:
- By mail (most common)
- In-person interviews
- Field audits (at your home or business)
1. Unreported Income
If you forget to include income from a 1099-NEC, 1099-INT, 1099-DIV, or a second W-2, the IRS will notice, because it also receives copies from your employers, banks, and brokerage firms.
Tip: Always double-check your income against your IRS transcript or import forms directly using tax software to avoid omissions.
2. Excessive Deductions for Income Level
If your deductions, like charitable donations, mortgage interest, or medical expenses — are much higher than average for your income, it can raise suspicion.
For example:
- Donating $20,000 on a $40,000 salary
- Claiming massive home office expenses as a part-time freelancer
Tip: Keep detailed receipts and written explanations for large deductions, especially if they’re outside normal ranges.
3. Self-Employed or Cash-Only Businesses
Freelancers, gig workers, and small business owners are more likely to be audited, especially if:
- They claim a large number of business deductions
- Report low income but high lifestyle spending
- Have inconsistent income records or no 1099s to match their revenue
Tip: Use accounting software, keep a mileage log, and separate personal and business accounts.
4. Big Round Numbers
Claiming round numbers like:
- $5,000 in advertising
- $3,000 in supplies
- $10,000 in meals and travel
…without cents or variation may signal you’re estimating rather than using exact records, a classic audit trigger.
Tip: Use actual figures — not guesses.
5. Claiming the Earned Income Tax Credit (EITC)
The EITC is a valuable refundable credit, but it’s also a major source of fraud.
Returns claiming the EITC are routinely reviewed, especially if dependent or income info looks inconsistent.
Tip: Double-check dependent eligibility rules and income thresholds to ensure you qualify.
6. Amended Returns and Late Filing
Filing an amended return (Form 1040-X) or submitting your taxes well past the deadline can sometimes bring your return under extra scrutiny, especially if it results in a refund.
Tip: If you file late or make changes, include documentation showing why and keep your explanation clear and consistent.
7. Foreign Bank Accounts or Crypto Transactions
If you hold overseas accounts, earn foreign income, or transact in cryptocurrency, the IRS is paying attention.
Failing to file FBAR (FinCEN Form 114) or Form 8938 for foreign holdings, or not reporting crypto sales can trigger an audit or penalty.
Tip: Report all crypto activity, including swaps and sales, and file required foreign asset forms — even if no tax is due.
How Common Are IRS Audits?
While the overall audit rate is low (about 0.38% of individual returns in recent years), these red flags can raise your chances significantly.
| Filer Type | Audit Rate |
|---|---|
| Earned <$25K + EITC | 1%+ |
| High-income filers >$500K | 1.5–5%+ |
| Self-employed (Schedule C) | Higher than average |
| Simple W-2 only returns | Very low |
How to Stay Audit-Proof
- Be honest, thorough, and organized
- Keep supporting documents for 3–7 years
- Avoid estimating or over-claiming deductions
- Use reliable tax software or a tax pro
- Respond promptly if the IRS contacts you
🔗 Related Posts
- IRS CP2000: What It Means and How to Respond
- What If You Disagree with an IRS Notice? Here’s How to Fix It
- 5071C, 4883C, 5747C: IRS Identity Theft Victim?
An IRS audit isn’t always avoidable, but by understanding what triggers it, you can reduce your risk and keep your filing clean.
The best defense? Be accurate, honest, and prepared.
🔗 Want to see how all of this fits together?
