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18 Red Flags for IRS Auditors

Ever wonder why some tax returns are eyeballed by the Internal Revenue Service while most are ignored? Short on personnel and funding, the IRS audited only 0.60% of all individual tax returns in 2017, and the vast majority of these exams were conducted by mail. So the odds are pretty low that your return will be singled out for review. And, of course, the only reason filers should worry about an audit is if they are fudging on their taxes.

That said, your chances of being audited or otherwise hearing from the IRS escalate depending on various factors, including your income level, the types of deductions or other tax breaks you claim, the business you're engaged in, and whether you own foreign assets. Math errors may draw IRS inquiry, but they'll rarely lead to a full-blown exam. Although there's no sure way to avoid an IRS audit, these 18 red flags could increase your chances of unwanted attention from the IRS.

Making a Lot of Money

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The overall individual audit rate may only be about one in 167 returns, but the odds increase as your income goes up. IRS statistics for 2017 show that individuals with incomes between $200,000 and $1,000,000 and no Schedule C attached had a 0.8% audit rate. It's 1.6% for Schedule C filers. Report $1 million or more of income? There's a one-in-23 chance your return will be audited.

We're not saying you should try to make less money -- everyone wants to be a millionaire. Just understand that the more income shown on your return, the more likely it is that you'll be hearing from

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