For most taxpayers, the chances of a tax audit are extremely small. Overall, the IRS audited just 0.7% of individual income tax returns in 2016, the lowest audit rate since 2003. That means that out of every 143 returns submitted, one got audited. And of the audits that were conducted, just 29% were conducted in the field. The rest were correspondence audits, which means they were done entirely by mail.

Furthermore, while some IRS audits are randomly chosen, many are triggered by specific items. Here are some of the factors that can boost the chance your tax return will be audited.

A calculator and pen sit on top of a tax form marked "audit."

Image source: Getty Images.

The biggest factor that increases your chance of an IRS audit

By far, the biggest predictor of whether your return will be audited is your income. Specifically, if your income is significantly higher or lower than average, your chances of an audit increase dramatically.

Just how much of a difference does your income make? Well, taxpayers with adjusted gross income (AGI) between $50,000 and $75,000 had the lowest audit rate in 2016, with just 0.41% of returns selected for examination. On the other hand, taxpayers with income above $10 million got audited 18.8% of the time. That means the highest-income group got audited at a rate 46 times higher than middle-income households.

Here's a breakdown of IRS audit rates in 2016 by income level. Your audit risk goes up significantly if you have an unusually high or low income:

Income (AGI) Range

% of Returns Audited In 2016

No AGI

3.25%

$1-$24,999

0.80%

$25,000-$49,999

0.49%

$50,000-$74,999

0.41%

$75,000-$99,999

0.52%

$100,000-$199,999

0.62%

$200,000-$499,999

1.01%

$500,000-$999,999

2.06%

$1,000,000-$4,999,999

4.60%

$5,000,000-$9,999,999

10.46%

$10,000,000 and above

18.79%

Data source: IRS.

Other factors that boost your audit risk

In addition to having a high or low income, there are a few other factors that increase the likelihood of an audit. Just to name some of the most common:

  • Self-employment income: If you have income that's reported on a Schedule C, that factor alone boosts your odds of a tax audit. For example, the average individual tax return with business income in the $100,000-$200,000 range had a 2.2% audit rate,more than three times that of nonbusiness returns. This effect is further magnified if your business continues to report losses year after year, or you claim business deductions that don't make much sense. For example, if you own a small local restaurant and claim tens of thousands of dollars in travel expenses, it might raise red flags at the IRS.
  • Home office deduction: As a general rule, the easier a deduction is to abuse, the closer the IRS tends to monitor it. And the home office deduction is easy to abuse, simply because the IRS has a strict definition of what constitutes a home office. There's more to the deduction's rules, but the general idea is that your home office needs to be your primary place of business and used solely for that purpose.
  • Unreported income: Hopefully you didn't forget to report any of your income, but if you did, it's highly likely that the IRS will notice. When you are sent a W-2 or 1099, the IRS also receives a copy and will make sure the numbers match up.
  • Errors: The rise in popularity of electronic tax software has greatly reduced the number of errors on tax returns, but they do happen. After all, it's easy enough to miss a zero and type 1,000 instead of 10,000. If your tax return contains any errors, it can increase the chance you'll be audited.

The Foolish bottom line

To be clear, there's no way to know with 100% certainty whether your tax return will be audited. Well, unless you commit blatant tax fraud – then your audit probability is pretty high.

The bottom line is that fewer than 1% of tax returns get audited, so if you're a fairly average taxpayer (middle income, with none of the situations discussed here), the chance you'll get audited is extremely low. Even if you are in one of the groups more likely to be audited, the possibility of an audit shouldn't give you nightmares, as long as you were truthful on your return. 

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