Many taxpayers fear being audited.
Tax returns indicating a high likelihood of understated income, or overstated deductions may be flagged for further review. The IRS evaluates tax returns for audit potential based on such factors as total income, deduction totals, and deduction classifications. Generally, IRS audits focus on capital gains, rental losses, or itemized deductions. The mail audit, the most common type of audit, is typically triggered when items reported on a given return do not match 1099 information forms filed. These include interest income, dividends, capital gains, and miscellaneous income.