4 red flags for an IRS tax audit — and how to avoid the ‘audit lottery,’ according to tax pros

As Americans file returns this season, some worry about IRS audits amid agency efforts to ramp up service, technology and enforcement.

Recent IRS enforcement has targeted high-income individuals, large corporations and complex partnerships. But everyday filers could still face an audit — and certain issues are more prone to IRS scrutiny, experts say.

You don’t want to face the “audit lottery,” warned Ryan Losi, a certified public accountant and executive vice president of CPA firm Piascik.

Audit rates of individual income tax returns decreased for all income levels from tax years 2010 to 2019, largely due to lower IRS funding, according to a report from the Government Accountability Office.

The IRS audited 3.8 of every 1,000 returns, or 0.38%, during fiscal year 2022, down from 0.41% in 2021, according to a 2023 report from Syracuse University’s Transactional Records Access Clearinghouse.

But many Americans could have a “false sense of comfort” about their personal audit risk, according to Mark Steber, chief tax information officer at Jackson Hewitt.

Here are some of the biggest IRS audit red flags. 

For many taxpayers, missing income is easy for the IRS to catch because of so-called information returns, which are tax forms that employers and financial institutions send to the agency.

For example, you may have freelance income reported via Form 1099-NEC or investment earnings on Form 1099-B.

Steber said “mismatched data” is the No. 1 thing that gets taxpayers into trouble. “If you leave stuff off [your return], that could get a question,” he said.

Another red flag could be excessive deductions compared to what’s considered normal for your income level, according to Losi.

For example, if your adjusted gross income is around $100,000, but you’re claiming itemized deductions — such as the charitable deduction — similar to million-dollar filers, that could raise eyebrows, he said.

“You…