19 IRS Red Flags: What Are Your Chances of Being Audited?

These red flags could increase your chances of the IRS selecting your return for audit.

As you're getting ready to file your tax return, you may be wondering about the chances that the IRS will audit your return. Your fear might be heightened, knowing that the Inflation Reduction Act, enacted two years ago, gave the IRS $80 billion in extra funds over ten years, with a large chunk of that money to be used by the agency for increased enforcement activities. Congress has clawed back about $25 billion of that funding in last spring's debt limit deal

Most people can still breathe easily, however, because the majority of individual returns escape the audit machine. 

  • In recent years, the IRS has audited significantly less than 1% of all individual tax returns. 
  • Plus, most audits are handled solely by mail, meaning taxpayers selected for an audit typically never actually meet with an IRS agent in person. 
  • Also, increased audits won't happen overnight. It will take the IRS time to hire experienced examiners and to train them to audit complicated tax returns. Most of the enforcement effects from the IRS funding won't be felt by taxpayers for a couple of years.

But this doesn't mean it's a tax cheat free-for-all. The bad news is that your chances at the unenviable audit lottery escalate (sometimes significantly) depending on various factors, including the amount of income you report, the complexity of your return, the types and amounts of deductions or other tax breaks you claim, whether you're engaged in a business, or whether you own foreign assets. Math errors could also draw an extra look from the IRS, but they usually don't lead to a full-blown exam. 

The same goes for errors with refundable tax credits, such as the earned income tax credit and the refundable portion of the child tax credit

In the end, there's no sure way to predict an IRS audit, but these 19 audit red flags could increase your chances of drawing unwanted attention from the IRS.

Joy Taylor
Editor, The Kiplinger Tax Letter

Joy is an experienced CPA and tax attorney with an L.L.M. in Taxation from New York University School of Law. After many years working for big law and accounting firms, Joy saw the light and now puts her education, legal experience and in-depth knowledge of federal tax law to use writing for Kiplinger. She writes and edits The Kiplinger Tax Letter and contributes federal tax and retirement stories to kiplinger.com and Kiplinger’s Retirement Report. Her articles have been picked up by the Washington Post and other media outlets. Joy has also appeared as a tax expert in newspapers, on television and on radio discussing federal tax developments.