For a typical individual filer, the chances of getting audited by the IRS are about 1 in 500. The overall examination rate for individual returns is roughly 0.2%, meaning 99.8% of returns go untouched in any given year.1Internal Revenue Service. Internal Revenue Service Data Book, 2024 That average is the floor of the conversation, not the end of it. Your income, the kinds of deductions and credits you claim, and whether you report self-employment or digital assets can push your odds well above or below the baseline.
Audit Rates by Income
Income is the single biggest predictor. Here is how examination rates break down for Tax Year 2022 returns, based on IRS Data Book figures through fiscal year 2024:1Internal Revenue Service. Internal Revenue Service Data Book, 2024
- Under $25,000: 0.4% (driven largely by Earned Income Tax Credit examinations)
- $25,000 to $50,000: 0.2%
- $50,000 to $200,000: 0.1%
- $200,000 to $500,000: 0.1%
- $500,000 to $1 million: 0.6%
- $1 million to $5 million: 1.1%
- $5 million to $10 million: 3.1%
- $10 million or more: 4.0%
If you earn between $50,000 and $200,000, your odds are roughly 1 in 1,000. Cross the $1 million line and the rate jumps more than tenfold. Low-income filers also see an above-average rate, almost entirely because of EITC verification work rather than complex examinations.
Why the Top-End Numbers Understate the Real Risk
Those snapshot rates undercount audits of high earners, because the IRS often does not open complex examinations until years after a return is filed. When all audits eventually completed on a tax year are tallied, the rates climb considerably. For Tax Year 2019, returns reporting $10 million or more ended up with an 11.0% examination rate, and the $5 million to $10 million bracket reached 3.1%.2Internal Revenue Service. Compliance Presence A 4% rate in year one can become a double-digit rate by the time the statute of limitations runs out.
Congress gave the IRS substantial additional enforcement funding in 2022, and the agency has publicly committed to raising audit rates on taxpayers earning above $400,000 while holding them steady below that threshold. If you are a high earner, assume the trend is up; if you are not, assume the baseline rate is roughly where you sit.
How the IRS Picks Returns
Your odds in any given year depend less on luck than on how your return compares to patterns the IRS already expects to see.
The DIF Score
Every return gets a computer-generated score through the Discriminant Function System, known as DIF. A high score means your numbers look unusual relative to other taxpayers with similar income, filing status, and occupation. Returns with the highest scores get pulled for manual review by a classifier, who decides whether to open an exam.3Internal Revenue Service. The Examination (Audit) Process A separate model called UIDIF scores returns specifically for the likelihood of unreported income.
The formulas are not public, but the principle is simple: the further your return deviates from the IRS’s expectations for someone in your situation, the more likely it gets flagged. A $300,000 charitable deduction on a $90,000 income draws attention; the same deduction against $2 million of income may not.
Information Matching
Before DIF scoring even runs, the IRS already knows most of your income. Employers, banks, and brokerages file their own copies of every W-2, 1099, and similar form. The Automated Underreporter program compares those third-party reports to what you put on your return.4Internal Revenue Service. IRM 4.1.27 Document Matching, Analysis and Case Selection A mismatch triggers a CP2000 notice proposing additional tax. Technically that is not an audit, but it functions as one from your side of the exchange.
Machine Learning
The IRS has layered machine learning on top of its older scoring systems. One model targets complex partnerships like hedge funds and private-equity structures that were historically too tangled to examine efficiently. Another, the Line Anomaly Recommender, flags corporate returns with $10 million to $250 million in assets. For individual returns, a newer tool identifies the top issues most likely to need adjustment on each return.
What Raises Your Odds
Schedule C Income and Repeated Business Losses
Self-employed filers draw more scrutiny than wage earners because the IRS cannot independently verify most of their income or expenses. Reporting business losses year after year is one of the clearest red flags. Under the hobby loss rule, an activity is presumed to be for profit only if it shows net profit in at least three of five consecutive years.5Office of the Law Revision Counsel. 26 US Code 183 – Activities Not Engaged in for Profit A side business that has lost money for four straight years can be reclassified as a hobby, with the deductions disallowed.
Claiming 100% business use of a vehicle is another item examiners view skeptically. Unless you have a separate personal car, the claim is hard to sustain, and the IRS expects a contemporaneous mileage log that most people never actually keep.
Outsized Deductions and Round Numbers
Itemized deductions that look large relative to your income push your DIF score up. Charitable contributions or unreimbursed expenses well above the average for your bracket suggest estimation rather than records. Reporting expenses in round numbers reinforces that impression: real spending rarely lands at exactly $5,000 or $3,000.
If the IRS does examine a deduction, the burden of proof is on you. Receipts, bank statements, and other records have to show both what you spent and why it qualifies.6Internal Revenue Service. Burden of Proof Travel, meals, gifts, and vehicle expenses require especially detailed documentation.
Cash-Intensive Businesses
Restaurants, salons, and other operations that take significant cash get extra attention because reported income is harder to verify electronically. The IRS may use indirect methods like bank deposit analysis to test whether reported income is realistic.
Earned Income Tax Credit Claims
The EITC has a high historical error rate, and the IRS examines EITC returns at roughly four to five times the overall individual audit rate.7Taxpayer Advocate Service. EITC Audits Will Once Again Begin; Proactively Responding to an EITC Audit Is Crucial Most are correspondence audits asking for proof of qualifying children or filing status. Residency, relationship, and age are the items the IRS most often challenges, so keep documentation on each.
Foreign Accounts
If your foreign financial accounts combined exceed $10,000 at any point during the year, you must file FinCEN Form 114, the Report of Foreign Bank and Financial Accounts.8Financial Crimes Enforcement Network. Report Foreign Bank and Financial Accounts The base civil penalty for a non-willful failure to file is up to $10,000 per violation, adjusted for inflation; for willful violations it jumps to the greater of $100,000 or 50% of the account balance.9Office of the Law Revision Counsel. 31 US Code 5321 – Civil Penalties International compliance is a stated enforcement priority.
Digital Assets
Form 1040 asks directly whether you received, sold, exchanged, or otherwise disposed of any digital asset during the year.10Internal Revenue Service. Digital Assets Answering no when third-party data suggests otherwise creates the same kind of mismatch the information-matching system catches with conventional income. Form 1099-DA is being phased in, which will require brokers to report proceeds from digital-asset transactions much like brokerages already report stock sales.11Internal Revenue Service. Treasury, IRS Issue Proposed Regulations to Make It Easier for Digital Asset Brokers to Provide 1099-DA Statements Electronically As that reporting infrastructure grows, the IRS’s ability to spot unreported crypto gains will catch up to its ability to spot unreported stock gains.
If You Are Picked
Not every audit involves an agent across a table. The format tracks the complexity of the issue.12Internal Revenue Service. IRS Audits
- Correspondence audit: handled by mail, usually targeting one or two items. These are the most common and typically resolve in three to six months.
- Office audit: you bring records to a local IRS office for in-person review.
- Field audit: a revenue agent examines records on-site at your home, business, or representative’s office. Field audits are reserved for complex returns, business filers, and high-net-worth individuals, and can take a year or more.
Initial contact always comes by mail. A caller claiming to be the IRS and demanding immediate payment is a scam. You have the right to professional representation at every stage, and for a field audit it is worth the cost.
How Far Back the IRS Can Reach
Audit odds are about more than the current filing year. The IRS generally has three years from the date you file to assess additional tax.13Office of the Law Revision Counsel. 26 US Code 6501 – Limitations on Assessment and Collection Three exceptions widen that window:
- If you omit more than 25% of your gross income, the IRS has six years.
- If the IRS proves fraud by clear and convincing evidence, there is no time limit at all.
- If you never file a return, the clock never starts.
Keep tax records for at least three years, six if there is any chance of a substantial income omission, and seven if you claimed a deduction for worthless securities or bad debt.14Internal Revenue Service. How Long Should I Keep Records? Records tied to property you still own should be kept until you sell and the statute runs on that year’s return.