The words “IRS audit” inspire dread out of proportion to how often they actually result in serious consequences. In reality, fewer than 1% of individual tax returns are audited each year — but understanding what attracts scrutiny is valuable for every taxpayer.
Common Audit Triggers
- Unusually high deductions relative to income (especially home office, charitable donations, or business expenses)
- Round numbers in every line — the IRS looks for suspiciously even figures
- Self-employment income without matching 1099s on file
- Claiming large losses from a business for multiple consecutive years
- Cryptocurrency transactions that weren’t reported
- Income inconsistent with prior years without explanation
Types of Audits
Most IRS audits are “correspondence audits” — a letter asking you to verify a specific item by mail. These resolve easily with good records. Office audits require an in-person meeting at an IRS office. Field audits (the most intensive) involve an IRS agent visiting your home or business.
How to Prepare
The single most important thing you can do is keep documentation for every deduction: receipts, bank statements, mileage logs, and contracts. The IRS has 3 years from your filing date to audit most returns (6 years if substantial income was omitted), so retain records accordingly.
