10 IRS Audit Triggers to Watch Out for in 2025

Taxes can be stressful, especially with the looming thought of an IRS audit. While the chances of being audited are relatively low for most taxpayers, certain red flags can increase your chances especially in 2025 as the IRS sharpens its focus on digital income, high earners, and suspicious filings.

Whether you’re filing your own taxes or using a preparer, knowing what audit triggers to avoid can save you headaches, time, and money. In this article, we break down the 10 most common IRS audit triggers for 2025 and how to stay off the radar.

1. Reporting a Lot Less Income Than Others in Your Bracket

The IRS uses computer algorithms to compare your return to others in your income group. If you make $80,000 but only report $25,000 in income, that gap might raise eyebrows.

2. Big Deductions That Don’t Match Your Income

Claiming large deductions like high charitable contributions, medical expenses, or home office write-offs while showing modest income can trigger closer scrutiny.

For example:
Donating $20,000 on a $40,000 salary may seem generous… but it’s also unusual.

3. Filing Schedule C with High Expenses (Self-Employed)

If you’re self-employed and use Schedule C to report business income and expenses, the IRS may look closely if your write-offs seem excessive or if your business reports losses year after year.

Common red flags:

• Writing off your entire rent or car
• Frequent business losses without proof of effort to profit

4. Cash-Heavy Businesses

The IRS closely watches industries known for unreported cash income—like restaurants, salons, and construction. If you’re in one of these fields, expect more scrutiny.

5. Math Errors or Sloppy Returns

A simple mistake like entering the wrong Social Security number, claiming the wrong deduction, or miscalculating totals can flag your return for manual review.

6. Claiming the Earned Income Tax Credit (EITC) Improperly

While the EITC helps low-to-moderate income earners, it’s one of the most commonly misused credits—and one the IRS reviews closely.

7. Claiming Too Many Dependents

Claiming multiple dependents (especially those not living with you) can raise flags—particularly if someone else (like a co-parent) also tries to claim the same child.

8. Cryptocurrency Transactions Not Reported

Starting in 2023 and expanding in 2025, the IRS is enforcing crypto tax reporting more aggressively. If you bought, sold, or traded cryptocurrencies and failed to report it, your return may be flagged.

9. Home Office Deduction Abuse

The IRS allows home office deductions for legitimate business use. But it’s only valid if a portion of your home is used exclusively and regularly for business—not your couch or shared family space.

10. Round Numbers or “Too Perfect” Returns

Filing with only round numbers (e.g., $2,000 for office supplies, $500 for gas) might seem neat, but the IRS knows real-world expenses are rarely that perfect.

Bonus: What Happens If You’re Audited?

If the IRS selects your return for an audit, it doesn’t always mean you did something wrong. But you will need to provide proof of income and deductions. Audits can be:

• By mail (correspondence audit)
• In-person (field audit)
• At an IRS office (office audit)

How to Lower Your Audit Risk in 2025

Here’s a quick checklist:

• Use a tax preparer or trusted tax software
• Save receipts and logs for 3–7 years
• Don’t guess or round large expenses
• Report all income (including gig, crypto, and tips)
• File accurately and on time

Final Thoughts

The best defense against an IRS audit is honest, accurate, and well-documented tax reporting. While most audits can be avoided, being prepared gives you peace of mind—and makes life a lot easier if the IRS ever comes knocking.

As the IRS expands its resources in 2025 to target underreported income and tax fraud, staying informed is your first line of defense.

Official website: irs.gov