According to tax experts, some of the main red flags in an IRS audit are:

As Americans file their returns this season, some are worried about IRS audits as government agencies ramp up services, technology and enforcement.

Recent IRS enforcement actions have targeted high-income individuals, large corporations, and complex partnerships. But experts say everyday filers can still face audits, and certain issues are subject to IRS scrutiny.

You don’t want to get caught in the “audit lottery,” warns Ryan Losi, a certified public accountant and executive vice president of the CPA firm Piascik.

The audit rate for individual income tax returns decreased at all income levels from tax years 2010 to 2019, largely due to reduced IRS funding, according to the Comptroller’s Office report.

The IRS audited 3.8 per 1,000 filings (0.38%) in fiscal year 2022, down from 0.41% in 2021, according to a 2023 report from Syracuse University’s Transaction Records Access Clearinghouse.

But many Americans may have a “false sense of security” about the risks of private audits, said Mark Steber, chief tax information officer at Jackson Hewitt.

Here are some of the biggest red flags in an IRS audit.

For many taxpayers, income deficiencies are easily discovered by the IRS through so-called information returns, which are tax forms sent by employers or financial institutions. To the agency.

For example, you may report freelance income on Form 1099-NEC or investment income on Form 1099-B.

Stever said the biggest problem for taxpayers is “data discrepancies.” “If you leave things alone [your return]that may be asked,” he said.

Another red flag, Rossi says, could be excessive deductions compared to what is considered normal for your income level.

For example, if your adjusted gross income is around $100,000, but you claim itemized deductions, such as the charitable deduction, like a $1 million filer, you may raise some eyebrows. He said that there is.

“We need detailed substantiation,” Rossi said, because if you can’t prove you qualify for the tax break during the audit, you could lose the deduction.

Accuracy is key when filing your return, and experts recommend using actual expenses rather than estimates of tax relief.

If you’re claiming a four- or five-digit deduction, it’s “very unlikely” that your expenses will be rounded down, Rossi said. “In doing so, you open yourself up to participate in the audit lottery,” he said.

The Earned Income Tax Credit, a tax cut for low- to moderate-income earners, has historically come under scrutiny “because the refund portion attracts certain bad actors,” Steber said.

It’s a complex credit with high “inappropriate payment rates,” state tax advocate Erin Collins said in her 2023 Purple Book of Legislative Recommendations.

While higher income earners are more likely to be audited, EITC claimants According to the Bipartisan Policy Center, audit rates are 5.5 times higher than other filers in the United States, and improper payments are a contributing factor.

However, the IRS announced that starting in fiscal year 2024, it will “significantly” reduce the number of correspondence, or mail-in, surveys for filers claiming the Earned Income Tax Credit.