Scenarios that Can Trigger a Tax Return Audit – Jackson Hewitt

Tax return audits are one of the hottest topics each tax season – and one of the biggest concerns of many taxpayers. To help consumers better understand items on their tax return that could increase their risk of being audited, Jackson Hewitt Tax Service® is sharing certain scenarios the IRS closely monitors for tax fraud.

Taxpayers, especially those who have claims in the areas listed below, should be prepared to provide the IRS with documentation to support their claims should the IRS audit their return. Jackson Hewitt Tax Pros can assist taxpayers with audit questions or concerns, even if Jackson Hewitt did not prepare the return in question.

“The best way to audit-proof your return is to ensure everything is accurate and in the right place,” said Mark Steber, Chief Tax Officer of Jackson Hewitt. “There are different levels of IRS audits, and the most common cause of an audit is due to tax return errors such as reporting income on the wrong line or form.”

However, individual returns can be flagged for review by computerized IRS screening, random sampling or an income document-matching program that compares the information in the tax return to information from the taxpayer’s bank, employer, W-2 and other tax documents. While the issues flagged by the document program are obvious triggers, there are other, more complex manners of choosing returns for audit.

The exact reasons the IRS analyzes a specific tax return are a closely-guarded secret. However, Jackson Hewitt advises taxpayers to be aware of the following red flags:

  • Unusually large amounts of deductions claimed that seem unreasonable when compared to the number of deductions claimed on other tax returns with similar income, such as high charitable contributions or large expenses on rental property
  • A large number of dependent exemptions claimed by a head of household with low income
  • Unusually high deductions for casualty losses, home office expenses, and travel and entertainment expenses
  • Significant nontaxable investment income, foreign source income or business losses
  • Self-employment income and no expenses, specifically when claiming the Earned Income Tax Credit

Jackson Hewitt notes that many audits can be handled quickly and easily with the taxpayer providing some additional information. The most important thing to do after receiving an audit notice from the IRS is to acknowledge it and respond promptly.

“Even if you did the tax return yourself, contact a tax professional before sending information or additional money to the IRS,” Steber cautioned. “The IRS does not necessarily have all the information they need, so there may be an error in the amount they state you owe. Your preparer can help determine what to do and locate the information needed to respond.”

Additional information on audits and guidance on what to do when being audited is available in the IRS Audits section of