The IRS audited about 0.38% of individual returns in 2022 (IRS Data Book). But certain items dramatically increase that probability. Here are the top triggers.

Top 10 IRS Audit Triggers

  1. High income: Returns with over $1M in income are audited at far higher rates
  2. Large Schedule C losses: Consistent losses from a business signal a hobby loss issue
  3. Excessive home office deduction: Large deductions relative to income draw scrutiny
  4. Round numbers: Estimates like $5,000 or $10,000 look suspicious β€” real expenses have cents
  5. Large charitable deductions: Non-cash contributions exceeding $500 require Form 8283
  6. High vehicle use percentage: Claiming 100% business use of a vehicle is a red flag
  7. Unreported income: The IRS receives copies of all 1099s and W-2s β€” mismatches trigger notices
  8. Foreign bank accounts: Failure to file FBAR or Form 8938 is heavily scrutinized
  9. Cash-intensive businesses: Restaurants, hair salons, and similar businesses face higher audit rates
  10. Math errors and missing forms: Simple errors can trigger correspondence audits automatically

What to Do If Audited

Respond promptly, gather documentation for every deduction, and consider working with an Enrolled Agent or tax professional. Most correspondence audits can be resolved without an in-person meeting.

Sources: IRS Data Book 2023; IRS.gov/audit