The IRS is stepping up audits. The Inflation Reduction Act of 2022 increased the IRS's budget, and the agency has upped its hiring of agents. Taxpayers in all brackets are more likely to hear from the agency.

While the IRS only audits a small percentage of tax returns, some mistakes may trigger an audit. By knowing these common triggers, taxpayers can reduce their chances of being audited.

Failure to Report Income

Taxpayers aren't the only ones who report income to the IRS. Businesses do as well. That's true for employees, contractors, and freelancers. If a taxpayer fails to report a source of income, especially one that appears on a W-2 or 1099-MISC, the IRS will know. 

1+1=3

Math mistakes happen. The IRS has computers that review tax returns as well as agents, and either may notice a problem.

Especially if a taxpayer does their own returns, it can be easy to forget to type a zero or another innocent mistake. Similarly, while the IRS doesn't count cents, that doesn't mean individuals should round down to make all of the numbers on a tax return divisible by ten.  

High Earners

Everyone should avoid mistakes on taxes, but the IRS is more likely to investigate high earners. Part of this is the numbers: the IRS stands to gain more from auditing someone making $1 million a year as compared to someone making $60,000 a year. 

The Home Office Deduction

With more people working from home, more people have home offices. Those who work from home may be able to claim this as a deduction, but only if the space is exclusively used as an office.

Too Many Charitable Deductions

Being generous is good, but being too generous - at least according to a tax return - can increase the risk of an audit. Keep a record of all charitable donations, and check that they can be claimed as deductions before filing taxes.

What to Do If You're Being Audited

If the IRS is auditing you, call Senior Partner, Tax Controversy Attorney, and former IRS attorney Brandon A. Keim at (602) 200-7399 or contact him online to discuss your options.