Introduction
The IRS reviews a small share of individual returns, but certain patterns consistently attract attention. These “triggers” range from obvious mismatches (1099s vs. your return) to more subtle signals (round-number deductions or a high ratio of charitable gifts to income). The IRS uses automated systems plus document matching to identify anomalies, and third-party reporting (W‑2s, 1099s) makes many inconsistencies easy to spot (IRS Data Book; IRS information reporting rules).
Top 10 IRS audit triggers (and what to do)
- High income or large changes in income
- Why it triggers: Higher incomes get more scrutiny, and big year‑to‑year swings can look suspicious.
- What to do: Report all income accurately and keep documentation for windfalls, stock sales, or one‑time payments.
- Large or unusual deductions relative to income
- Why it triggers: Deductions far outside the norm for your filing group stand out to automated filters.
- What to do: Keep receipts, contemporaneous records and a short explanation tying deductions to business activity.
- Repeated or excessive business losses
- Why it triggers: Ongoing losses can prompt the IRS to test whether an activity is a hobby (non‑deductible) rather than a business.
- What to do: Document a profit motive—business plan, marketing, efforts to increase profits—and consult Publication 535 and IRS guidance.
- Mismatches between third‑party reports and your return
- Why it triggers: The IRS receives copies of W‑2s, 1099s and brokerage statements; mismatches are auto‑flagged.
- What to do: Reconcile and amend returns promptly if you discover missing income; keep all 1099s and broker statements.
- Large or oddly timed charitable donations
- Why it triggers: Donations that are large relative to income or lack supporting receipts invite questions.
- What to do: Keep written acknowledgments from charities for gifts $250+, and document non‑cash gifts with receipts and appraisals when required.
- Home office and percent‑of‑use claims
- Why it triggers: Home office deductions are often taken incorrectly (must be exclusive and regular business use).
- What to do: Keep floor‑plan photos, dated logs, and calculations supporting the exclusive business area and percentage used.
- 100% business use of vehicles
- Why it triggers: Claiming total business use when personal use exists is a common red flag.
- What to do: Maintain mileage logs showing business vs. personal miles or use an app that creates contemporaneous records.
- Foreign bank accounts and offshore income
- Why it triggers: Failure to report foreign accounts (FBAR or FATCA) or foreign‑source income carries high compliance risk and penalties.
- What to do: File FinCEN Form 114 (FBAR) and Form 8938 when thresholds apply; consult a specialist for offshore reporting (see IRS international taxpayer resources).
- Round numbers and repeated patterns in deductions
- Why it triggers: Round or repeated deduction amounts look less like precise record‑keeping and more like estimates.
- What to do: Use actual receipts and record exact amounts rather than rounding.
- Frequent filing errors or amended returns
- Why it triggers: Multiple mistakes or repeated amendments can make a return more likely to be examined.
- What to do: Double‑check math, cross‑verify forms, and if you must amend, include a clear explanation and supporting documents.
If you receive an audit notice
- Read the notice carefully—most IRS letters tell you exactly what they want and why. Respond by the deadline and provide only the documents requested.
- Consider getting professional help. In my practice I’ve found that a well‑organized response packet often resolves issues without in‑person meetings. See our guide on How to Prepare for an IRS Office Audit: Documentation, Meetings, and Best Practices.
- Keep copies of everything you send and use certified mail or secure electronic channels when available.
Record retention and statute of limitations
- Keep records for at least three years, which is the IRS’s typical statute of limitations. The IRS can go back six years for substantial omissions (missing more than 25% of income) and has no time limit for fraud or returns not filed. For details, see IRS guidance on how long to keep records (IRS Topic 152).
Practical recordkeeping tips
- Use digital backups: scan receipts and store them in dated folders.
- Create a simple table or ledger for recurring expenses (mileage, meals, home office costs) and reconcile monthly.
- Keep supporting documents for non‑cash contributions, appraisals, and broker statements.
Further reading and internal resources
- For a focused checklist on evidence to support deductions, see our article: Audit‑Proofing Your Deductions: Evidence Every Taxpayer Should Keep.
- For a broader look at common triggers and risk‑reduction strategies, see: Common Audit Triggers and How to Reduce Your Risk.
Authoritative sources
- Internal Revenue Service (IRS), general guidance and Data Book: https://www.irs.gov and https://www.irs.gov/statistics/irs-data-book
- Tax Foundation analysis of audit selection and common triggers: https://taxfoundation.org
- National Taxpayer Advocate reports: https://www.taxpayeradvocate.irs.gov
Professional disclaimer
This article is educational and does not replace personalized tax advice. For guidance tailored to your situation, consult a CPA or tax attorney.
