IRS Audit: What It Is, Triggers, and What Happens Next

The words “IRS audit” can sound scary, like something out of a courtroom drama. But in reality, an audit is just the IRS double-checking that your income, deductions, credits, and tax bill match your records. Your best defense against an IRS tax audit is to file accurately and carefully, and to keep your tax records up to date and organized.

Let’s dive deeper into what an IRS audit is, what might trigger an audit, and what happens next, so you know what to expect if you are ever audited.

At a glance

An IRS tax audit is a review of your return and records — not an automatic accusation of fraud.

Most individual filers face a low audit rate, but mistakes, mismatches, and complex returns can increase scrutiny.

The IRS generally has three years to audit most returns (longer in some cases).

Most audits start with an IRS audit letter by mail; the IRS does not initiate audits by phone or email.

If you are audited, respond by the deadline with organized records.

What is an IRS audit?

An IRS audit, also called a tax audit or taxation audit, is an examination of your tax returns and supporting records. The goal is to confirm that your reported income, tax deductions, credits, and tax liability all match and comply with IRS rules.

An audit does not automatically mean you did something wrong. The Internal Revenue Service selects some returns for audit through random sampling, while others are flagged by software. The agency can choose to review individual returns, business returns, and any related forms, such as Schedule C for self-employment income or Schedule D for capital gains.

During an audit, the IRS may ask you to:

Explain specific items on your return

Provide receipts or other records to support certain tax breaks

Submit copies of prior tax returns

If the examiner finds errors, you may owe additional tax, interest, or penalties, but not always. In some cases, you may even receive a refund if the IRS determines you overpaid.

How common are IRS audits?

Your overall audit rate is relatively low, especially if you have straightforward income and file an accurate return. According to the most recent IRS Data Book, the IRS only examined about 0.36% of individual returns for tax years 2015 through 2023. That means fewer than 4 in 1,000 individual filers were examined.

Audit rates are not the same for everyone. Higher-income taxpayers and filers with more complex returns tend to face greater scrutiny. For example, during the same 2015-2023 timeframe, the IRS audited 7.9% of individual returns filed by taxpayers with total positive incomes above $10 million.

But even with low overall odds, it pays to file carefully. A complete return supported by good records is always your best defense against an audit.

Tax tip: For more perspective and tips on staying calm, read 5 reasons to stop worrying about a tax audit.

When does the IRS audit you?

The IRS can begin a tax audit after you file your return — sometimes within months, sometimes a year or more later, depending on the issue and the IRS audit timeline for your case. Some audits are random, while others start when the IRS computer system flags a discrepancy between your return and the information returns the IRS has on file for you (like W-2s or 1099s).

Here are several ways the audit process can begin:

After filing: The IRS may review your current-year return during its normal processing cycle.

After a mismatch: If your reported income does not match third-party documents, the IRS may send you a notice before a full audit begins.

After an amended return: Filing an amended return does not always draw additional review, but if the amendment changes your income or tax credits significantly, the IRS might want to take a closer look.

Years later: The IRS can audit years down the road, but they generally must act within the statute of limitations, which we cover in more detail below.

If you receive an IRS audit letter or notice, open it right away and note the response deadline. Many notices are straightforward information requests you can resolve quickly with the right documents.

Common IRS audit triggers and red flags

Besides random selection, several IRS audit triggers can cause the IRS to take a closer look. Inconsistencies, large write-offs, and other discrepancies can all act as audit red flags for the IRS.

Common audit triggers may include:

Unreported income: Missing wages, 1099-NEC payments, investment income, self-employment income, or similar is usually a red flag and may trigger an audit.

Large deductions relative to income: Unusually high charitable deductions, business expenses, or itemized deductions compared with similar filers can prompt questions.

Claiming refundable credits: Returns claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) may face added compliance checks.

Self-employed losses year after year: Consistent Schedule C losses, especially in activities that look more like hobbies, may attract attention.

Home office and business write-offs: If you’re claiming the home office deduction or travel and entertainment expenses, make sure these are well-documented in case the IRS asks for supporting records.

Digital assets and cryptocurrency transactions: Buying, selling, or trading crypto like Bitcoin and other digital assets without proper reporting can prompt the IRS to review your return more closely.

Math errors and missing forms: Simple mistakes, such as typos or missing forms, can lead to notices and follow-up review.

While these factors can increase your chances of being audited, it’s not a guarantee — so don’t skip legitimate deductions out of fear of an audit! Claim everything you’re eligible for, just be sure to keep all related receipts and file an accurate return.

Types of IRS audits

Not every IRS audit works the same way. The scope and setting depend on how complex your tax situation is and how much documentation the IRS needs.

Audit typeHow it worksComplexityCorrespondence auditHandled by mail; IRS requests specific docsUsually simplestOffice auditYou meet at a local IRS officeModerateField auditIRS agent may visit your home, business, or accountantMost in-depth

Correspondence audit

A correspondence audit is handled entirely by mail. This is the most common type of IRS audit. The IRS typically asks for specific documents, such as proof of a deduction or clarification of income reported on a 1099 form.

If you receive a correspondence audit letter, read the instructions carefully, respond by the deadline, and send only what is requested. Clear, organized responses can often resolve these audits quickly.

Office audit

An office audit requires you to meet with an IRS examiner, typically at a local IRS office. These audits usually involve more complicated issues than a standard correspondence audit, such as itemized deductions, small business expenses, or multiple income sources.

You may attend an office audit on your own or bring a legal or tax professional with you. You also have the right to know why the IRS is requesting information and to make an audio recording of the interview with advance notice.

Field audit

A field audit is the most in-depth type of IRS audit. An IRS agent may visit your home, place of business, or accountant’s office to review records in person. Field audits are more common for businesses and high-income taxpayers with complex returns.

Because field audits can cover multiple tax years and broad financial records, including bank deposits and business ledgers, preparation is especially important. Strong recordkeeping throughout the year makes dealing with these types of audits much more manageable.

How far back can the IRS audit you?

The IRS generally cannot audit your returns forever, as there is a statute of limitations that sets a deadline for the IRS to assess additional tax.

For most individual filers, the IRS has three years from the date you filed your return, or two years from the date you paid the tax, whichever is later, to assess additional tax. That is why it’s a good idea to keep at least three years of tax returns and supporting records on hand.

In certain situations, the IRS has more time to audit:

Six years: If you omitted more than 25% of your gross income, the IRS may have up to six years to audit that return.

No time limit: If you never filed a return or filed a fraudulent return, the statute of limitations may not protect you.

Willful evasion or fraud: When the IRS finds substantial errors or proves fraud, there may be no statute of limitations on assessment.

How many years of tax returns should you keep?

In most cases, keep tax returns and supporting documents for at least three years after you file. That matches the standard IRS statute of limitations. Sometimes you might want to keep records longer, such as when you underreported income, claimed certain deductions, or own property you may sell later.

For a full breakdown of retention periods, organization tips, and how to dispose of old documents securely, see our guide on how long to keep tax records. If you file with TaxAct®, you can also access prior-year returns online if the IRS asks for them.

What happens if you get audited by the IRS?

If the IRS audits you, the process usually follows a predictable path. Knowing the steps can help you stay calm and organized.

Here’s how it usually plays out:

You receive an IRS notice. The letter explains what tax year is under review and what the IRS needs from you, such as a request for specific documents.

Gather records. Collect W-2s, 1099s, receipts, bank statements, mileage logs, and any other documents that support the items under review. See records the IRS might request.

Respond or meet with the IRS. For a correspondence audit, you can mail or sometimes upload documents. For an office or field audit, you meet with an examiner in person.

The IRS makes a determination. Using the information you provided, the examiner may accept your return as filed, propose changes, or request more information.

You agree or appeal. If you agree with the findings, you sign and pay any additional tax liability or collect a refund (if applicable). If you disagree, you can request a meeting with an IRS manager or file an appeal within the IRS. The IRS also offers voluntary mediation, a.k.a., alternative dispute resolution (ADR).

Throughout the audit process, it’s important to remember that you have taxpayer rights, including the right to representation and the right to know why the IRS is requesting information.

Tax tip: If you filed with TaxAct and added Audit Defense provided by Tax Protection Plus1 at checkout, you can get professional help responding to IRS and state inquiries.

How much money will the IRS audit you for?

There is no fixed dollar amount that triggers an audit, and there is no standard penalty amount that applies to every case. Instead, the financial impact depends on what the IRS finds.

If the audit results in changes to your return, you may owe:

Additional tax: The extra income tax on income or deductions the IRS disallows.

Interest: Charged on unpaid tax from the original due date.

Penalties: Accuracy-related penalties, failure-to-pay penalties, or, in rare cases, penalties tied to tax evasion if the IRS finds intentional wrongdoing.

For example, if the IRS determines you failed to report $10,000 of 1099 income, your added tax liability depends on your tax bracket and any related changes to credits or deductions. Interest and penalties can also increase the total amount owed.

On the flip side, an audit can sometimes work in your favor. If the IRS finds deductions or credits you missed, you could receive a tax refund.

Who is more likely to face an IRS audit?

While anyone can be selected for a random audit, certain filers tend to receive more attention because their returns are more complex or involve refundable credits with higher error rates.

Filers who should pay extra attention to accuracy include:

Self-employed taxpayers reporting business income and expenses on Schedule C.

Investors with stock sales, capital gains, and cryptocurrency transactions reported on Schedule D.

Taxpayers claiming refundable credits, such as the EITC or ACTC.

High-income earners with multiple income streams and large itemized deductions.

Taxpayers with foreign accounts who may need to file an FBAR or related international reporting forms.

Again, these situations won’t automatically result in an audit, but they could cause the IRS to look more closely at your return.

Tax tip: If you are self-employed, TaxAct Self-Employed can help guide you through reporting your business income and deductions on the right tax forms.

How to reduce your audit risk

While you cannot eliminate your audit risk entirely, you can reduce it by ensuring you file an accurate return.

To help prevent an audit:

Report all income. Include W-2 wages, 1099-NEC payments, any other 1099 income, investment proceeds, and side-gig earnings.

Double-check numbers. Typos and missing forms are easy to avoid with careful review.

Keep documentation. Save receipts for charitable donations, business expenses, deductible daycare costs, and all major deductions and credits.

Be realistic with deductions. Only claim expenses you can prove and that qualify under IRS rules.

Report digital assets correctly. Track cryptocurrency transactions and report gains and losses as required.

File on time. Late or missing returns create their own problems, as well as extend the IRS’s ability to examine your return.

If you file with TaxAct, our step-by-step interview process helps you catch common errors before you file. Our tax preparation software walks you through income, credits, and deductions so your return is complete and consistent with IRS expectations.

How TaxAct can help if you’re audited

Filing accurately from the start is your best protection, but if the IRS contacts you anyway, you don’t have to handle it alone. When you file with TaxAct, you can add Audit Defense¹ at checkout. If the IRS or your state taxing authority questions your return, an audit professional can help respond on your behalf.

FAQs

An IRS audit is a review of your tax returns and records to verify that your income, deductions, credits, and tax liability are correct. Most audits begin with an IRS letter requesting additional information or documents.

How far back can the IRS audit you?

For most returns, the IRS generally has three years from the filing date to audit you. However, the window can extend to six years if you substantially underreported income, and sometimes even longer in cases of unfiled or fraudulent returns.

What are common IRS audit triggers?

Common audit triggers include unreported income, large or unusual deductions, refundable credits such as the EITC, self-employment losses, cryptocurrency transactions, and mismatches between your return and IRS information documents.

How many years of tax returns should I keep?

Keep tax returns and supporting records for at least three years in most cases. Retain them for six or seven years if your return involves substantial underreported income, worthless securities, or bad debt deductions. See our guide on how long to keep tax records for the full details.

What happens if you get audited by the IRS?

First, you will receive a mailed notice explaining what the IRS is reviewing and what records they are requesting (the IRS will never initiate an audit by phone). Once you receive the notice, you will need to provide any requested documentation, meet with an examiner if required, and either agree with the findings or appeal. Depending on the outcome, you may owe additional tax or receive a refund.

What is a correspondence audit?

A correspondence audit is conducted entirely by mail. With this type of audit, the IRS requests specific documents or explanations, and you respond in writing. It is the most common and usually the simplest type of IRS audit.

How do I know if the IRS received my response?

Always confirm receipt with the IRS after any delivery. For mailed documents, you can request delivery confirmation through the U.S. Postal Service. If your audit letter shows the phone number 866-897-0177 or 866-897-0161, you can check your audit status in your individual online account under the Records and Status tab.

What happens if I don’t respond to an IRS audit by the due date?

You must respond by the date specified on your IRS audit letter or notice. Failure to do so by the deadline may result in the IRS completing the audit and issuing a report with their proposed adjustments to your tax return.

How much money will the IRS audit you for?

There is no set dollar threshold for an audit. The financial impact depends on what the IRS changes on your return, including any additional tax, interest, and penalties owed. The amount varies widely based on your income, deductions, and the issues under review.

When does the IRS audit you?

The IRS can start an audit after you file, often months or even years later, within the statute of limitations (typically within the last three years, but not always). Many audits begin because of document mismatches, refundable credit claims, something out of the ordinary, or simply random selection.

How long does an IRS audit take?

It depends on the type of audit. A correspondence audit may wrap up in a few weeks once you send documents, while office and field audits can take months, especially if the IRS is reviewing multiple tax years or complex business records.

The bottom line

An IRS audit is a review of your tax return, not an automatic accusation of wrongdoing. Most taxpayers face a low audit rate, and many IRS audit cases close quickly when you respond on time with accurate records. If you have concerns about being audited, familiarize yourself with common audit triggers, understand how far back the IRS can look, and keep your tax returns organized and on hand for at least three years.

Filing a complete, accurate return is the best way to move through tax season with confidence. Start your return with TaxAct and get step-by-step guidance for your unique tax situation. And if you want extra peace of mind, consider adding Audit Defense1 for professional support in case the IRS contacts you later.

This article is for informational purposes only and not legal or financial advice.

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1 See Audit Defense provided by Tax Protection Plus (PDF) for further details of services and requirements. May not apply to certain forms and credits. Certain customers may not qualify for services based on past tax audit history, residency, or other factors. Audit Defense is not insurance. Audit Defense is subject to terms and conditions (PDF) located on Tax Protection Plus’s website.

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