As millions of taxpayers file returns, many worry that certain claims could boost their chances of being picked for an IRS audit. 

After an infusion of funding, the agency said it aimed to more than double the audit rate for the wealthiest taxpayers. But the IRS’ future priorities are unclear amid changing leadership and a Republican-controlled Congress and White House. 

Still, some areas can be “low-hanging fruit for the IRS,” said Mark Baran, managing director at financial services firm CBIZ’s national tax office.    

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Regardless of your income, you shouldn’t round numbers or estimate expenses on your return, Baran said.

“You’re really playing the audit lottery and increasing your risk,” he said.

Here are some other common IRS red flags for audit, according to some tax experts.

The IRS often finds missing income via so-called “information returns,” or tax forms, which employers and financial institutions send to taxpayers and the agency.

For example, these could include Form W-2 for wages, 1099-NEC for contract or gig economy work or 1099-B for investment earnings.

IRS software compares these tax forms to your return, and it can be “flagged for audit” when there’s a mismatch, explained Elizabeth Young, director of tax practice and ethics for the American Institute of Certified Public Accountants, or AICPA.   

For example, if your charitable deduction is 30% to 50% of your adjusted gross income, that could prompt “another set of eyes,” Baran said.

Another common target is the earned income tax credit, or EITC, a refundable tax break for low- to moderate-income workers, experts say.

“There are people who claim it improperly for one reason or another,” said Syracuse University law professor Robert Nassau, director of the school’s low-income tax clinic. “It can be confusing,” with eligibility based on earnings, residency and family size.  

Higher earners are more likely to face an audit, but EITC claimants have a 5.5 times higher audit rate than the rest of U.S. filers, partly due to improper payments, according to the Bipartisan Policy Center.

Through fiscal year 2023, the IRS examined 0.44% of individual returns filed for tax years 2013 through 2021, according to the latest IRS Data Book. 

When audits involve “mistakes or innocent omissions,” they are typically conducted via so-called “correspondence audits,” which happen by mail, Baran said.

More than 77% of fiscal year 2023 audits occurred via correspondence, the IRS reported. The remaining were face-to-face “field” audits.

Either way, filers with “substantiation really should not fear,” said Baran, noting the importance of receipts and other records to support claims on your return.

“The IRS knows when somebody is prepared and they will move on,” he said.  

If you have a tax bill or bigger than expected refund this season, it may be time to update your paycheck withholding, which can be tricky, experts say.  

Typically, there’s a refund when you overpay taxes throughout the year, and a tax bill when you don’t pay enough. It’s up to the employee to tell employers how much federal tax to withhold from each paycheck via Form W-4. 

The form “seems like a calculus problem,” said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida. But there’s a “quick and dirty” way to figure it out, he said.

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After filing your 2024 return, you can see your “total tax” on line 24 on the second page of your filing, Form 1040, Lucas said. If your earnings and tax situation are the same for 2025, your tax liability should be similar.

Next, you’ll need to know how much you’re withholding from each paycheck and how many pay periods remain for 2025 to see if you’re on track, he explained.

For example, let’s say your “total tax” was $10,000 for 2024. If there are 23 pay periods left in 2025, you’ll need to withhold roughly $435 from each paycheck, Lucas said.

To withhold more, you can resubmit Form W-4 with an “extra withholding” added in the “other adjustments” section of step 4, he said.

“That’s the simple, back-of-the-napkin method,” Lucas said.

However, you’ll need to readjust your W-4 at the beginning of the next tax year. It should also be updated as your tax situation changes — like a bonus, second job, marriage, divorce, having a child and more.

If your tax situation has changed or you want a more detailed update, you can use a free IRS tool known as the “tax withholding estimator,” Lucas said.

“It’s intuitive and it actually does a really good job,” he said.

You’ll also need pay stubs from all jobs (including your spouse) and most recent tax returns. But it won’t be a good fit “if your tax situation is complex,” according to the IRS.

With rapid changes in income, investment earnings or retirement plan distributions, you may need quarterly estimated tax payments to avoid IRS penalties, said Sheneya Wilson, a certified public accountant and founder of Fola Financial in New York. 

As economists ring alarm bells over the impact of President Donald Trump’s tariff policy on consumers and the U.S. economy, there’s a group of Americans who may benefit: tourists traveling abroad.

That’s due to the impact of tariffs on the U.S. dollar and other global currencies. Economists expect tariffs imposed on foreign imports to strengthen the U.S. dollar and potentially weaken major currencies like the euro.

In such a case, travelers would have more buying power overseas in 2025, economists said. Their dollar would stretch further on purchases like lodging, dining out and guided tours that are denominated in the local currency.

“Tariffs, all else equal, are good for the U.S. dollar,” said James Reilly, senior markets economist at Capital Economics.

The Nominal Broad U.S. Dollar Index in January hit its highest monthly level on record, dating to at least 2006. The index gauges the dollar’s strength against currencies of the U.S.’ main trading partners, like the euro, Canadian dollar and Japanese yen.

Meanwhile, the ICE U.S. Dollar Index (DXY) – another popular measure of the strength of the U.S. dollar – is up more than 3% since Trump’s election day win.

Trump on Thursday laid out a plan to impose retaliatory tariffs against trading partners on a country-by-country basis. Specific levies will depend on the outcome of a Commerce Department review, which officials expect to be completed by April 1.

Meanwhile, Trump has imposed an additional 10% tariff on Chinese goods. A 25% duty on all steel and aluminum imports is set to take effect March 4. Further, a 25% tariff on Canada and Mexico may take force in March, after being paused for 30 days.

The Canadian dollar offers a recent example of the potential impact of a tariff, Reilly said.

On Feb. 4, when the Canadian tariffs were set to take effect, the U.S. dollar spiked to its highest level in at least a decade against the Canadian dollar, before eventually falling back when Trump delayed the duties for a month.

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A trade war with China in 2018-19 during Trump’s first term also offers insight into the impact of tariffs on currencies, J.P. Morgan global market strategists wrote in October.

The Trump administration raised tariffs on about $370 billion of Chinese goods from an average of 3% to 19% during 2018-19, and China retaliated by raising tariffs on U.S. exports from 7% to 21%, the J.P. Morgan strategists wrote.

While other factors also influenced currency moves, trade policy uncertainty “tended to bolster the dollar,” J.P. Morgan reported. The DXY index rose up to 10% during tariff announcement windows in 2018 and 4% in 2019, they wrote.

Tariffs are generally viewed as inflationary, since the import duties are expected to raise consumer prices, at least in the short term, economists said.

The Federal Reserve would likely keep interest rates elevated to keep a lid on U.S. inflation, which hasn’t yet fallen back to policymakers’ target level after soaring in the pandemic era.

“We expect the USD [U.S. dollar] to remain strong in the short term, mostly on the back of US inflationary policies and particularly tariffs,” Bank of America currency analysts wrote in a note Friday.

(Their analysis was of “G10” nations: Belgium, Canada, France, Germany, Italy, Japan, The Netherlands, Sweden, Switzerland, the United Kingdom and U.S.)

Based on available information around Trump’s retaliatory tariff plan, the average effective tariff rate on all U.S. imports would rise from less than 3% now to around 20% — which would add about 2% to U.S. consumer prices and temporarily boost inflation to 4% in 2025, Paul Ashworth, chief North America Economist at Capital Economics, estimated Thursday.

On the flip side, other nations’ economies would likely suffer from the U.S. levies, Reilly said.

Take Europe, for example.

Europe might export less to the U.S. as a result, which would negatively impact the European economy, he said. That would make it more likely for the European Central Bank to cut interest rates in order to bolster the economy, Reilly said.

A wider interest-rate differential would result from elevated U.S. interest rates and lower European rates.

Such a dynamic would likely lead investors to move money into U.S. assets — perhaps U.S. Treasury bonds, for example — to seek a higher relative return, causing them to sell euro-denominated assets in favor of dollar-denominated assets, Reilly said.

In this case, higher demand for the U.S. dollar and lower demand for the euro may lead to a stronger dollar, he said.

The euro and British pound sterling are especially sensitive to such interest-rate differentials, while emerging-market currencies are less so, Reilly said.