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FAQ: Do I have a higher risk of being audited if I file early?

FAQ: Do I have a higher risk of being audited if I file early?

Often, timing is everything or so the adage goes. From medicine to sports and cooking, timing can make all the difference in the outcome. What about with taxes? Does timing play a factor in raising or decreasing your risk of being audited by the IRS? For example, does the time when you file your income tax return affect the IRS's decision to audit you? Some individuals think filing early will decrease their risk of an audit, while others file at the very-last minute, believing this will reduce their chance of being audited. And some taxpayers don't think timing matters at all.

When to file

Some individuals believe that since the pool of filed returns is small at the beginning of the filing season, they have a greater chance of being audited. There is absolutely no evidence that filing your tax return early increases your risk of being audited.

If you expect a refund from the IRS you should consider filing early so that you receive your refund sooner.

What your return says is key

If it's not the time of filing, what really increases your audit potential? The information on your return, your income bracket and profession -- not when you file -- are the most significant factors that increase your chances of being audited. The higher your income the more attractive your return becomes to the IRS to audit. And if you're self-employed and/or work in a profession that generates mostly cash income, you are also more likely to draw IRS attention.

Further, you risk piquing the IRS's interest and triggering an audit if:

  • You claim a large amount of itemized deductions or an unusually large amount of deductions or losses in relation to your income;
  • You have questionable business deductions;
  • You have a high income (the IRS considers $100,000 to be "high income");
  • You claim tax shelter investment losses;
  • Information on your return doesn't match up with information on your 1099 or W-2 forms received from your employer or investment house;
  • You have a history of being audited;
  • You are a partner or shareholder of a corporation that is being audited;
  • You are self-employed or you are a business or profession currently on the IRS's "hit list" for being targeted for audit, such as Schedule C (Form 1040) filers);
  • You are primarily a cash-income earner (i.e. you work in a profession that is traditionally a cash-income business)
  • You claim the earned income tax credit;
  • You report rental property losses; or
  • An informant has contacted the IRS asserting you haven't complied with the tax laws.

DIF score

Most audits are generated by a computer program that creates a DIF score (Discriminate Information Function) for your return. The DIF score is used by the IRS to select returns with the highest likelihood of generating additional taxes, interest and penalties for collection by the IRS. It is computed by comparing certain tax items such as income, expenses and deductions reported on your return with national DIF averages for taxpayers in similar tax brackets.

If you would like help preparing your federal income tax return or in assessing your individual audit risks, please don't hesitate to contact our office today.


If and only to the extent that this publication contains contributions from tax professionals who are subject to the rules of professional conduct set forth in Circular 230, as promulgated by the United States Department of the Treasury, the publisher, on behalf of those contributors, hereby states that any U.S. federal tax advice that is contained in such contributions was not intended or written to be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer by the Internal Revenue Service, and it cannot be used by any taxpayer for such purpose.