Who is Most Likely To Get Audited by the IRS in 2024?
Written by
Sean Fisher, AI Editor
Edited by
Sean Fisher
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Tax season is almost over, and most have already filed, some filers wonder if it’s not the end of the road for their tax situation in 2024. The Internal Revenue Service (IRS) audits a small percentage of tax returns each year to ensure compliance with tax laws. While the likelihood of being audited is generally low, certain factors can increase your chances. Here’s a look at who is most likely to get audited by the IRS in 2024:
High-Income Earners
Taxpayers with higher incomes are more likely to be audited. In 2024, individuals earning over $500,000 annually may face increased scrutiny. The IRS often focuses on high-income earners due to the potential for substantial tax underreporting.
Self-Employed Individuals
Self-employed taxpayers, particularly those who file Schedule C (Profit or Loss from Business), or sole proprietors are more likely to be audited. According to The IRS pays close attention to self-employed individuals because of the possibility of unreported income and overstated deductions.
Taxpayers Claiming Large Deductions or Credits
If you claim significantly higher deductions or credits than the norm for your income level, you may raise red flags. For example, large charitable contributions, home office deductions, or business expenses that are disproportionate to your income could increase your audit risk.
Cash-Based Businesses
Businesses that primarily deal in cash, such as restaurants, salons, or retail shops, are more likely to be audited. The IRS may scrutinize these businesses to ensure all cash transactions are accurately reported.
Taxpayers with International Transactions
If you have foreign bank accounts, investments, or income from sources outside the United States, you may be more likely to face an audit. The IRS closely monitors international transactions to prevent tax evasion.
Taxpayers with Complex Returns
Individuals with complex tax returns that involve multiple schedules, investments, rental properties, or business activities are more likely to be audited. The complexity increases the likelihood of errors or discrepancies.
Previous Audit History
If you’ve been audited in the past and had significant adjustments made to your return, you may be more likely to be audited again in the future.
Mathematical Errors or Inconsistencies
Simple mistakes, such as mathematical errors or inconsistencies between your return and the information reported by employers or financial institutions, can trigger an audit.
Conclusion
While the overall risk of being audited by the IRS is low, certain factors can increase your chances. Staying organized, accurately reporting your income and deductions, and seeking professional tax advice can help reduce your audit risk. If you do receive an audit notice, it’s important to respond promptly and provide the requested documentation to support your tax return.
Editor's note: This article was produced via automated technology and then fine-tuned and verified for accuracy by a member of GOBankingRates' editorial team.
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