15 Main Reasons Why the IRS Might Decide to Audit You

IRS building exterior

The Internal Revenue Service building in Washington, D.C. | Andrew Caballero-Reynolds/AFP/Getty Images

Don’t fear the tax man. Nearly a quarter of Americans are worried about the possibility of an IRS audit, a 2017 Rasmussen Poll found. That’s the highest level in 10 years. But most are losing sleep over something that will never happen. Only a tiny fraction will actually have to endure a face-to-face sit-down with an IRS examiner.

Of more than 146 million individual taxpayers in the United States, fewer than 1%, or about 1.2 million, had their 2015 tax returns audited, according to the IRS. (Budget cuts have reduced the number of audits considerably.) Who are the unlucky audit victims? Although anyone can be the subject of an audit, certain red flags on your return raise the risk considerably.

“There are no specific deductions that raise a taxpayer’s chances of being audited, but there are actions that raise a red flag and should be avoided,” Dave Du Val, the chief customer advocacy officer for TaxAudit.com, told The Cheat Sheet. “For example, the IRS is always on the lookout for both unreported income and high expenses.”

Accidentally duplicating employee and business expenses or having losses on hobby businesses are other red flags, he said. Avoiding sloppiness when preparing your taxes can reduce the chances the IRS will ask questions about your return.

“Always be careful and accurate when preparing your taxes. And remember that actual receipts and records must be kept to prove eligibility for every deduction or credit,” Du Val said.

What specific red flags does the IRS look for on tax returns? If any of these 15 situations apply to you, an audit could be in your future.

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