With the Internal Revenue Service expanding its enforcement efforts in 2025, taxpayers are asking a familiar question: Am I at risk of an audit this year?
The latest IRS Data Book shows a continued push for more targeted audits, particularly among high-income filers and businesses. While overall audit rates remain low, the IRS is using AI, analytics, and new compliance strategies to zero in on specific taxpayer groups.
Here’s what to know about your chances of being audited in 2025—and how to avoid common red flags.
Who is most likely to be audited in 2025?
While the average taxpayer has a low audit probability—around 0.2% to 0.5%—the IRS is concentrating resources on:
- High earners (incomes over $400,000)
- Large businesses and corporations
- Cryptocurrency users
- Self-employed filers with high deductions
- Claimants of the Earned Income Tax Credit (EITC)
In particular, the IRS says it’s using data analytics to flag unusual patterns, especially on business returns and high-variance deductions.
IRS enforcement trends to watch
The 2024 IRS Data Book outlines several key compliance areas seeing renewed focus:
- Schedule C filers (sole proprietors) reporting high expenses or net losses
- Excessive charitable deductions
- Questionable dependent claims
- Unreported foreign income
- Crypto transactions without proper reporting
Increased funding and staffing under recent federal legislation is fueling a renewed focus on closing the so-called “tax gap”—the difference between taxes owed and taxes paid.
Top red flags that could trigger an audit
To reduce your risk of audit in 2025, avoid these common errors and red flags:
- Failing to report all income (including gig work or digital assets)
- Claiming business losses year after year
- Reporting excessive deductions compared to income
- Filing with large charitable donations that lack documentation
- Using round numbers throughout your return (e.g., $5,000, $10,000, etc.)
The IRS has automated systems that cross-check your filings against employer-reported W-2s, 1099s, and third-party data.
What happens if you’re audited?
If the IRS selects your return for review, the process can happen in two ways:
- Correspondence audit – Conducted by mail. The IRS asks for supporting documents.
- Field audit – In-person visit from an IRS agent, usually for more complex issues.
You have the right to dispute findings, submit additional evidence, or request representation by a CPA, enrolled agent, or attorney.
The IRS also provides access to the Taxpayer Advocate Service if you feel you’re being treated unfairly or need assistance navigating the audit.
How to protect yourself
Here are steps every taxpayer can take to stay audit-ready:
- Keep organized records for at least 3–6 years
- Use reliable tax software or a certified tax professional
- Report all income sources—even from side gigs or investments
- Don’t inflate deductions or credits without proof
- File electronically to reduce errors
If the IRS does reach out, always respond promptly and keep copies of all correspondence.
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