IRS enforcement targets high-income individuals, large corporations, and complex partnerships, but average taxpayers should be cautious about red flags to minimize audit risks.

Experts have identified several red flags that could increase the likelihood of an IRS audit, despite a decrease in individual income tax return audit rates. These red flags include missing income, mismatched data, excessive deductions compared to income level, and claiming the earned income tax credit (EITC). To avoid being part of the "audit lottery," taxpayers should use actual expenses rather than estimates, ensure accurate substantiation for tax breaks, and be cautious when claiming large or round deductions.

February 13, 2024
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