Part 3/9:
While you can't eliminate all risk of an IRS audit, avoiding certain common red flags can substantially reduce your chances. Here are four major areas that auditors scrutinize:
1. Income Discrepancies
The most significant red flag relates to your income reporting. The IRS matches the income you claim on your tax return with what is reported by third parties through forms like W-2s and 1099s. If there’s a mismatch—say you report less income than the government knows about—you could be flagged for further review, which may involve information requests or fines.