Common Red Flags That Will Prompt the IRS to Pull Your Income Tax Return Aside for an Audit

You can never completely avoid the possibility of being audited when tax time rolls around, but you can make it less likely with these tips

You may have seen ads claiming certain actions will ensure you never get audited by the Internal Revenue Service (IRS). The truth is that there is no way to completely eliminate the chance of an audit. While the overall percentage of taxpayers chosen for an audit is usually less than one percent, you can take steps to make it less likely that your return will be flagged. These tips can help reduce your audit risk while keeping your filings accurate and compliant.

How does the IRS decide to audit?

Some audits are random, but most are triggered by certain factors. The IRS may look at:

• Whether taxpayer forms match information on their returns
• Significant changes from previous years, such as large charitable donations that are unusual for you
• Whether tax ID numbers match those reported by others, such as employers or those claiming dependents
• Whether your reported numbers are consistent with others in your demographic

Always check your math before filing

Math errors remain one of the most common reasons returns are flagged. These mistakes are easy for the IRS to detect and can lead to deeper scrutiny. Pay special attention to the first two pages of your return where totals flow into other forms.

Avoid standing out without documentation

The IRS focuses on returns that deviate sharply from typical patterns. For example, claiming charitable donations larger than your taxable income will stand out. While legitimate if supported by records, unusual deductions may be better claimed in a year when they will not appear extreme.

Double check Social Security Numbers

Entering an incorrect Social Security Number for yourself or dependents will cause problems, especially if the number is already in use on another return. Correct entries reduce the risk of delays and audits.

Students should coordinate with parents

College students and parents sometimes both claim the student as a dependent, creating a duplicate that will trigger IRS review. Decide in advance who will claim the exemption to avoid this issue.

Gather all required forms before filing

Make sure you have all W-2s, 1099s, and other income statements before you file. If the IRS receives information from an employer or bank that is missing from your return, your return could be flagged.

Claim deductions and credits accurately

Improper or excessive credits and deductions can raise red flags. Be sure you meet eligibility rules and retain documentation. Examples of mismatches include claiming a child care credit without listing a child as a dependent, or claiming mortgage interest deductions far out of proportion to your reported income.

Report all income

Consistently reporting deductions larger than your income, or showing repeated business losses, can draw attention. The IRS compares your reported income to what third parties report, so underreporting is likely to be caught.

High income can draw attention

Sudden increases in income compared to prior years may prompt a review. Higher earners, especially those reporting over $200,000, are statistically more likely to be audited.

Avoid suspicious rounding

Exact figures look more credible than numbers rounded to the nearest hundred or thousand. While you may round to the nearest dollar, avoid patterns that look like estimates.

Correct mistakes promptly

If you find an error after filing, submit an amended return. A timely correction shows good faith and can reduce the risk that the IRS will examine earlier returns.

North Carolina taxpayers, extra considerations

Residents should remember that the North Carolina Department of Revenue (NCDOR) often shares information with the IRS. If your federal return is adjusted, your state return may also be reviewed. This means that errors on your federal filing can lead to state-level inquiries. Keep copies of all federal and state correspondence, and if you receive a notice from either agency, respond promptly.

Quick tips for reducing audit risk

• Verify all names, Social Security Numbers, and figures before filing
• Keep detailed records for all deductions and credits
• Coordinate with family members on who will claim dependents
• Ensure all forms (W-2, 1099, etc.) are included and match IRS records
• Report all sources of income, even small amounts
• Contact a tax professional if your return involves unusual items
• North Carolina filers should watch for state notices after any IRS change

Disclaimer: This information is for general educational purposes only and is not legal or tax advice. Tax situations vary, and you should consult a qualified tax professional or the IRS for guidance specific to your circumstances.