If the thought of tax season coming and possibly undergoing an IRS audit fills you with anxiety, you’re not alone.
As the late Sen. Orrin Hatch once said, “The Internal Revenue Service is the most feared federal agency in the country.”
The fact is that audit anxiety is real.
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According to the American Psychological Association and Psychology Today, audit anxiety is a situational manifestation of anticipatory anxiety. That’s a visceral reaction marked by an acute sense of worry and concern over potential findings and possible adverse consequences, even if you’ve done nothing wrong.
Many taxpayers fear being audited by the IRS, even though data show that the chances of an individual taxpayer being audited are relatively slim for most. Still, if you’re worried, read on for some tips on how to cope.
What’s so scary about being audited by the IRS?
There are several reasons that people might fear an IRS audit, but a big one is that the U.S. tax code is notoriously complex and difficult to understand. Tax forms are only marginally less so.
It’s easy to make mistakes, whether in understanding the law or completing your income tax return.
Other factors that can inspire audit anxiety include:
- Fear of owing money to the IRS and concern over whether back taxes, penalties, or interest will put a strain on finances
- The idea of government officials combing through personal records
- The stigma of being judged as dishonest or careless
- Prior audits or hearing about others’ negative experiences
- Lack of professional guidance
And then, there’s perhaps the biggest reason of all: Some tax returns that are audited by the IRS are chosen at random — simply the luck of the draw.
Ways to beat audit anxiety
While it may be impossible to eliminate the chances of being audited, there are some things taxpayers can do to lessen audit risk.
1. File an accurate return. The IRS devotes several technical resources to finding inaccuracies in returns. These computer systems rank returns for:
- the potential for error using a secret IRS formula
- the potential of having unreported income
- by comparing the information you reported to the information provided by third parties to see if everything matches up.
The IRS also uses AI and data analytics to detect discrepancies.
In addition to calculations, filing an accurate return includes properly reporting marital or dependent status and proper income reporting from more than one source.
2. Stay organized year-round. Create a filing system and keep receipts, invoices, and documents for deductions and credits in one place.
3. Know the red flags for an IRS audit. These include, among others, large charitable deductions and home office deduction claims. This is not to say you shouldn’t claim these if you’re eligible for them, but you should make sure you have the documentation to back them up.
4. File on time. Late filing will mark your return for IRS enforcement, making it more likely to be audited.
5. Consult a tax professional. If you have a complex return, using a tax professional can ease anxiety and ensure compliance.
6. File your return electronically. E-filing can help reduce math errors and ensure faster processing. For an extra fee, some tax preparation software companies offer representation in case your return is chosen for audit.
7. Don’t chase large refunds. Don’t cheat and claim deductions or expenses you didn’t have. This is a tactic the IRS is well aware of. You may escape audit for a particular filing season. But if you do it consistently and are audited once, the IRS can pull your returns for an indefinite period for audit. In other words, the IRS’s normal 3-year window for auditing returns never closes.
8. Maintain perspective. In 2024, the IRS reportedly performed 505,514 audits across all return types. That’s an audit rate of about 0.05% or about 1 in 200 returns.
Data generally show that high-income taxpayers and low-income taxpayers are the most likely to be audited. The middle class has been the least likely to be audited: the IRS Data Book shows that, as of 2022, middle-income taxpayers were subject to an audit rate of 0.01%.
