8 IRS Audit Red Flags Every Taxpayer Should Know

Don’t risk an audit—understand the warning signs and stay compliant.

Navigating tax season can be tricky, especially as IRS systems evolve to catch inconsistencies. While most people won’t be audited, certain actions can raise red flags. Here are 8 common triggers so you can better protect yourself:

1. Sudden Income Swings Big changes—up or down—can look suspicious. Keep thorough records to explain the variance.

2. Unreported Income Side gigs and small amounts count. Be sure every source of income is reported to match IRS records.

3. Excessive Business Deductions Deductions are good—but don’t stretch personal expenses into business ones.

4. Questionable Home Office Claims Only claim a home office if it’s used exclusively for work. Vague or mixed-use claims can lead to scrutiny.

5. Large Charitable Donations Ensure your giving aligns with your income level and is well-documented.

6. Cryptocurrency Activity Crypto is treated as property. Every trade, sale, or payment must be reported.

7. Foreign Bank Accounts If you’ve got more than $10K abroad, you may need to file an FBAR—even if it’s just signature authority.

8. Ineligible Tax Credits Tax credits are heavily audited. Make sure you qualify and meet all the fine-print requirements.

   
   

Stay ahead of audits. Work with Verity CPAs to ensure accuracy, solid documentation, and full compliance. Whether it’s business or personal taxes, we’re here to guide you through every detail.

📞 Contact Verity CPAs at info@verity.cpa or 808.546.5026.