Audit Triggers

Audit Triggers
For most taxpayers, whether a business or individual, the chance of an IRS examination (audit) is about 1%. For a taxpayer earning over $1,000,000 per year, the odds exceed 8%. Less than 1% of S-corporations and partnerships filed are audited. Odds of IRS audit increase dramatically when:

1. information is omitted
2. report high incomes
3. self-employed
4. fail to file necessary schedules/forms
5. receive large refunds
6. deduct casualty losses
7. claim tax credits
8. report foreign bank accounts (or don't)
9. fail to report income reported to IRS by third parties (e.g. banks, brokers, 1099's)
10. high income with rental losses
11. currency transaction reports (CTR) (report of cash deposit more than $10,000) Form 8300 filed with IRS. Visit: Currency Transaction Reports
12. document mismatches
13. informants (e.g. disgruntled spouse or employee)
14. referrals from other federal or state agencies

For a list of common audit triggers... See Audit red flags.