While you might assume you can't be audited if you've already received money back from your taxes, that's a misconception. You can.

The U.S. Internal Revenue Service (IRS) can audit tax returns even after it has issued a tax refund to a taxpayer. According to the statute of limitations, the IRS can audit tax returns filed within the previous three years. In instances when a significant error is identified, the IRS can audit returns filed even farther back than that, but typically no more than the previous six calendar years.

What Is a Tax Audit?

Every year, the IRS selects many tax returns for audits. This process essentially involves having your return inspected by an IRS representative. The person checking your return may be looking for errors or discrepancies that might have caused you to underpay your taxes. Audits can also be requested if tax fraud is suspected.

According to the IRS, 582,944 returns were chosen for an audit in the 2023 fiscal year. This resulted in $31.9 billion in recommended additional tax. Tax returns can be selected for an audit regardless of whether a taxpayer has been issued a refund. Tax returns selected for audits are chosen for two reasons:

• Random selection and computer screening: Some returns are chosen for audit based on a statistical formula. The IRS compares the taxpayer's return against "norms" for similar returns in these cases. The return may get audited if it's notably different or stands out as an outlier.
• Related examinations: The IRS may select a return for audit if it involves issues or transactions with other taxpayers—such as business partners or investors—whose returns were selected for audit.
  

The IRS mainly conducts its tax audits via mail or personal interviews at local IRS offices or "in the field" at your business or home.

What Can Trigger a Tax Audit?

While your odds of being targ💎eted for an audit are relatively low (less than half a percent of individual returns are audited), some returns are mܫore likely to be scrutinized than others.

The IRS doesn't specify exactly why it chooses some returns for audits and not others. Again, it's worth noting that some selections are made entirely at random, meaning you could have a perfectly accurate return and still be audited.

But if you're wondering what might increase your odds of being audited, here are some common red flags that could lead the IRS to take a closer look at your return.

Earning a Higher Income

Being a higher earner could work against you at tax time if the IRS suspects that you're trying to cut corners and minimize your tax liability. Taxpayers earning $1 million or more tend to have a much higher chance of being audited than those earning less than $1 million.

Failing to Report All of Your Income

If you work as an independent contractor, received gambling or lottery winnings in the prev💯ious year, or experienced another income windfall, failing to report those things on you𝔉r return could trigger an audit.

Excessive Deductions

Deductions can help reduce your taxable income for the year and potentially increase your refund. But if it looks like you're taking deductions (or澳洲幸运5开奖号码历史查询: tax credits) you aren't entitl�🐓�ed to—or your deductions seem unusually high—that might prompt the IRS to review your return.

Being Self-Employed

澳洲幸运5开奖号码历史查询:Self-employment means you may have irregular income or that—instead of reporting in♚come—you're reporting business losses. If your self-employment returns show any unusual patterns with income or losses, theꩵ IRS may want to check that your tax reporting is accurate.

Using Rounded Numbers

You might assume it's easier just to round up or down when reporting income or expenses, but that's a no-no. The IRS might raise an eyebrow if your return is full of round numbers, since it may look like you're guessing at what your income or expenses actually were.

What If Your Return Is Audited After You've Received a Refund?

If you've been audited, what happens next depends on what the audit turns up (or doesn't). Tax audits can result in no corrections or corrections with a taxpayer either owing more or being entitled to a larger refund—although the latter is rare.

If you owe taxes after an audit, it's in your best interest to pay as quickly as possible. The IRS can assess a failure-to-pay penalty if you don't pay promptly, and interest can accrue. If you don't have the money to pay in full, reach out to the IRS to discuss setting up an installment agreement to pay your outstanding taxes over time.

Statute of Limitations for Tax Audits

While the IRS tries to audit tax returns as soon as they are filed, it is not unusual to receive an audit notice about tax issues going back a few years. There is a statute of limitations for how much time the IRS has to impose additional taxes𝄹—typically three years after a return is due or was filed, depending on which is later.

If a tax issue is not resolved within the time permitted by the statute of limitations, the IRS may ask a taxpayer to extend the statute for additional time. A taxpayer can decline such a request, forcing the IRS to make its tax determination based on available information only.

The Bottom Line

You can indeed be audited by the IRS, even if you've already received a tax refund. If you are chosen for an audit, consider whether you want to get assistance from a tax professional to navigate the process. Most important, be prompt in responding to IRS requests for documentation or other information so the audit can be resolved as quickly as possible. If you do have to pay more in taxes, try to pay it off as soon as possible to minimize the penalties and interest you owe.