I wrote a couple of posts on some common IRS audit red flags shortly after tax season ended and never finished the list. So here are a few more items that might cause the IRS to want to look at your tax returns a little more closely.

  • Large or unusual changes in income from year to year – Did you used to be a big earner and now your income went down? What about if you were a low earner and are now raking in the dough? These situations are red flags for the IRS who suspect you’re hiding something.
  • Extraordinarily high deductions – Your mortgage interest, property taxes, and medical expenses far exceed your income. So how did you eat last year? The IRS keeps tabs on deduction to expenses and might wonder if you’re too far out of line.
  • Unusual changes in deductions from year to year – Low mortgage interest last year, very high this year. No donations to charities last year, big donations this year. Big changes between the years draws the scrutiny of the IRS.
  • Round numbers – Oh yes, it’s so much easier to just estimate that you donated $10,000 to charity last year. But the IRS is wise to that. They know that really means “I didn’t keep any documentation and I’m guessing.” What a slam dunk for an audit adjustment.

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