As taxpayers prepare for the 2026 filing season, a former IRS insider is urging people to pay close attention to five common red flags that can trigger audits, delays, or additional scrutiny from the Internal Revenue Service. These warnings are meant to help filers avoid preventable mistakes and better understand how the IRS evaluates tax returns. Knowing where problems tend to arise can make the filing process smoother and reduce the risk of follow-up questions from the agency.
One of the most common issues involves deductions that appear unusually large when compared to a taxpayer’s income. The IRS uses statistical models to compare returns against others in similar income brackets, and deductions that are significantly higher than average can raise concern. This often includes excessive charitable donations, large business losses, or itemized deductions that do not align with earnings. While legitimate deductions are allowed, taxpayers should ensure they are reasonable, accurately calculated, and backed by proper documentation such as receipts or records.
• Claim deductions that are reasonable for your income
Deductions should make sense in relation to what you earn. Overstated or unsupported deductions stand out quickly and can prompt further review. Keeping clear records and only claiming deductions you can justify helps reduce scrutiny.
Another red flag involves mismatches between what taxpayers report and what the IRS already has on file. Employers, banks, and financial institutions send copies of W-2s, 1099s, and other income documents directly to the IRS. If the numbers on a return do not match those records, the system may automatically flag the return, resulting in processing delays or notices requesting clarification.
• Make sure your reported income matches IRS records
Before filing, taxpayers should carefully compare their return against every tax document received. Even small discrepancies can cause delays or trigger IRS correspondence.
Failing to report all income is another frequent problem. Some taxpayers mistakenly believe that side income, small payments, or nontraditional earnings do not need to be reported. In reality, wages, freelance income, interest, dividends, rental income, and other taxable funds must all be included. Omissions, even accidental ones, can lead to penalties or adjustments after filing.
• Report all sources of income
Keeping track of income throughout the year helps avoid omissions. The IRS expects all taxable income to be reported, regardless of the source or amount.
Refundable tax credits are also an area where mistakes are common. Credits such as the earned income tax credit can result in large refunds, but they come with strict eligibility rules. Claiming these credits without meeting the qualifications or failing to provide required documentation can delay refunds or trigger additional review.
• Be careful when claiming refundable tax credits
Taxpayers should fully understand eligibility requirements before claiming credits. Maintaining proof that supports eligibility can help avoid delays and questions.
The former IRS insider also cautioned taxpayers who work from home or operate small businesses to be especially careful when claiming business expenses. Business deductions must be ordinary, necessary, and directly related to earning income. Personal expenses misclassified as business costs are a frequent issue and can increase audit risk.
• Separate personal and business expenses clearly
Using separate accounts, keeping receipts, and maintaining detailed records can help demonstrate that claimed business expenses are legitimate.
Overall, taxpayers are encouraged to slow down, review their returns carefully, and keep documentation that supports income, deductions, and credits. Using reputable tax software or seeking guidance from a qualified tax professional can further reduce errors. Filing accurately and transparently not only helps prevent IRS issues but also makes the entire tax season less stressful.
