Tax season can feel stressful, even if you think you’ve done everything right. But some choices you make on your tax return can raise red flags with the IRS. No one wants to get that audit letter in the mail. Audits can take up your time, cost you money, and cause a lot of worry. Knowing what actions might trigger an audit can help you avoid mistakes. Here’s what you need to watch out for when filing your taxes this year.
1. Claiming Excessive Deductions
If your deductions seem too high for your income, the IRS may take a closer look. For example, if you make $50,000 but claim $20,000 in charitable donations, that stands out. The IRS uses computer systems to compare your deductions to those of others in your income bracket. If yours are significantly higher, you may be flagged. Only claim deductions you can prove with receipts or records. Don’t round up numbers or guess. If you’re unsure, refer to the IRS guidelines to determine what’s allowed.
2. Failing to Report All Income
Every W-2 and 1099 you receive is also sent to the IRS. If you forget to include income from a side gig, freelance work, or investments, the IRS will notice. Even small amounts count. Leaving out income, even by accident, can trigger an audit. Double-check your records and ensure that you report everything accurately. If you get paid in cash, keep your records. The IRS expects you to report all taxable income, no matter how you earned it.
3. Claiming the Home Office Deduction Incorrectly
The home office deduction is a common audit trigger. To qualify, you must use part of your home regularly and exclusively for business. That means you can’t claim your kitchen table if you also eat dinner there. The IRS looks for people who stretch the rules. If you claim a large portion of your home as an office, be ready to show proof. Take photos, keep floor plans, and document how you use the space.
4. Large Charitable Donations Without Documentation
Charitable giving is great, but the IRS wants proof. If you claim big donations, you need receipts or written acknowledgments from the charity. Cash donations over $250 require a letter from the organization. Non-cash donations, like clothing or furniture, need a detailed list and sometimes an appraisal. If you can’t back up your claims, you risk an audit. Only claim what you can prove, and keep your paperwork for at least three years.
5. Business Losses Year After Year
If you report a business loss several years in a row, the IRS may question whether you’re running a real business or just trying to write off a hobby. The IRS expects most businesses to make a profit at least three out of five years. If you continue to report losses, be prepared to demonstrate that you’re actively trying to generate a profit. Keep records of your business plan, marketing efforts, and expenses to track your progress. If you can’t prove you’re running a real business, your deductions could be denied.
6. Claiming Earned Income Tax Credit (EITC) Errors
The Earned Income Tax Credit helps low- and moderate-income workers, but it’s often claimed incorrectly. Mistakes with the EITC are a common reason for audits. You must meet specific requirements regarding income, filing status, and dependents. If you claim the credit when you’re not eligible, the IRS will notice. Double-check the requirements before you file.
7. Unusual or High Business Expenses
If you’re self-employed, the IRS expects your business expenses to be reasonable for your industry. Claiming large or unusual expenses, like a luxury car or expensive travel, can raise questions. Only deduct expenses that are ordinary and necessary for your business. Keep receipts and be ready to explain any big purchases. If your costs seem out of line with your income, you could get audited.
8. Math Errors and Typos
Simple mistakes can cause big problems. If you make a math error or enter the wrong Social Security number, the IRS may flag your return. Double-check your math and review every line carefully before filing. Using tax software can be helpful, but it’s still your responsibility to ensure everything is accurate. Even minor errors can delay your refund or trigger an audit.
9. Failing to Report Foreign Accounts
If you have money in a foreign bank account, you must report it if the total value exceeds $10,000 at any time during the year. The IRS is strict about foreign accounts. Failing to report them can lead to penalties and an audit. Use the FBAR (Foreign Bank Account Report) form to disclose your accounts. If you’re not sure if you need to file, talk to a tax professional.
Staying Audit-Ready: Smart Moves for Peace of Mind
Making careful choices at tax time can help you avoid a surprise audit. Keep good records, report all your income, and only claim deductions you can prove. If you’re unsure about a deduction or credit, check the IRS website or ask a tax expert. Being honest and accurate is the best way to stay out of trouble. Audits are rare, but they do happen—especially when your return stands out. Take your time, review your return, and file with confidence.
Have you ever been audited or worried about it? Share your story or tips in the comments.
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