The IRS Is Watching: 5 Red Flags That Could Trigger an Audit

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The IRS Is Watching: 5 Red Flags That Could Trigger an Audit

//business-finance.news-articles.net/content/202 .. ing-5-red-flags-that-could-trigger-an-audit.html

Published in Business and Finance on Thursday, February 13th 2025 at 15:40 GMT by Investopedia
^{🞛 This publication is a summary or evaluation of another publication 🞛 This publication contains editorial commentary or bias from the source}

The IRS is always on the lookout for tax returns that just don't make sense. Making these five errors can increase the chances that your return will be audited.

The article from Investopedia outlines several red flags that might trigger an IRS audit. Key points include: discrepancies between reported income and W-2 or 1099 forms, claiming unusually high deductions or losses relative to income, especially in categories like home office or charitable contributions; engaging in cash-intensive businesses like restaurants or bars where income can be underreported; failing to report all income, including foreign accounts or cryptocurrency transactions; claiming 100% business use of a vehicle; and having a high income which statistically increases audit likelihood. Additionally, the article mentions that certain types of income or deductions, like those from rental properties or self-employment, are more scrutinized. The IRS uses algorithms and random selection to decide which returns to audit, but these red flags significantly increase the chances of an audit.

Read the Full Investopedia Article at:
[ https://www.investopedia.com/red-flags-trigger-an-audit-8787649 ]

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The IRS Is Watching: 5 Red Flags That Could Trigger an Audit