IRS Audits: Lifestyle Discrepancies Can Trigger Scrutiny

Dr Friday Tax Tips - One Minute Moment
Dr. Friday Tax Tips
IRS Audits: Lifestyle Discrepancies Can Trigger Scrutiny

Dr. Friday cautions taxpayers that the IRS employs software to analyze lifestyle factors when determining audit targets. Even if your tax returns are consistent and accurate, living a lifestyle that appears to exceed your reported income can raise red flags. Owning a large house, making multiple car payments, and having substantial investments while reporting a low income may trigger an audit. To protect yourself, Dr. Friday advises reporting all your information accurately to avoid discrepancies between your lifestyle and reported income.


G’day, I’m Dr. Friday, president of Dr. Friday’s Tax and Financial Firm. To get more info, go to This is a one minute moment.

People are always concerned when they’re looking at their taxes, like, oh, does this look right? Can I be audited on it? And keep in mind, just because your taxes may be consistent and look, but the IRS also has a software that looks at lifestyle. That’s right, so if you’re living in a large house and you have multiple car payments, which report to the IRS, you have a lot of investments and different things, and you’re showing a very low income, you could be audited, not because you’ve done anything wrong, but because your lifestyle is showing higher than your income. So just make sure you report all of your information so that you can protect yourself.

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