When your income climbs into six or seven figures, so does the IRS’s interest in your tax return. High earners don’t just pay more, they’re also more likely to be audited, questioned, or investigated. And it’s not always because of wrongdoing. The IRS is simply more likely to take a closer look when there’s more money on the table.

Understanding why high-income earners get flagged can help you avoid problems, minimize stress, and stay ahead of any IRS inquiry. Let’s walk through the key reasons why you might be on the radar.

The IRS Focuses Their Resources

The IRS doesn’t audit at random. With staffing shortages and budget constraints, the agency has to be strategic. That means they put more energy into reviewing tax returns where a small error could cost the government a lot.

If you make $1 million a year, a misreported deduction or an under-reported business expense can result in tens of thousands in lost revenue for the IRS. Compare that to someone earning $40,000—and it’s easy to see why higher earners get more attention.

In recent years, the IRS has made it clear that it’s directing enforcement toward wealthier taxpayers. That includes individuals with:

• Total incomes over $400,000
• Complex investment portfolios
• Multiple business interests or partnerships
• Offshore accounts or foreign income

High earners tend to file more complicated returns, and complexity invites scrutiny. The IRS isn’t just chasing tax cheats—it’s trying to make the best use of limited audit resources.

Risky Moves to Get You Noticed

Certain actions—intentional or not—raise red flags. These are the things that make IRS algorithms pause and say, “We should look at this more closely.”

Here are common triggers that make your return more likely to be reviewed:

• Large charitable donations: Giving generously is great, but if your deductions don’t line up with your income, the IRS may ask for proof.
• Unreported income: With multiple income streams, it’s easy to miss a 1099 or forget a small stock sale. But the IRS matches documents.
• Home office deductions: Claiming a large portion of your home as office space, especially on a high-income return, will be scrutinized.
• Foreign accounts: Failing to report foreign income or FBAR forms can lead to penalties—and attention from international enforcement partners.
• Excessive business deductions: Trying to write off lavish meals, entertainment, or personal travel as business expenses is a fast track to questions.
• Round numbers: Returns with too many neat, even figures can suggest estimates instead of real numbers. That’s a no-go.

Even if you’re doing things by the book, certain moves can make your return stand out and not in a good way.

How to Reduce Your Audit Risk and Stay Prepared

You don’t have to fear the IRS—but you do have to stay vigilant. Being proactive about tax planning and documentation can save you time, money, and stress. Here’s how to stay ahead:

Keep detailed records.

High earners often juggle multiple income sources, real estate holdings, and business interests. That means more opportunities for deductions—and more chances to make a mistake. Keep meticulous records of every income stream, expense, and financial transaction. Use accounting software or hire a bookkeeper if necessary. When the IRS comes knocking, the burden is on you to prove your numbers.

Work with trusted advisors.

Not all tax professionals are created equal. If your financial life is complex, surround yourself with a team that understands high-net-worth planning. A good CPA or tax attorney will do more than just file your return—they’ll help you structure your finances in a way that minimizes audit risk and ensures year-round compliance. Choose someone who takes the time to understand your long-term goals.

Avoid aggressive tax positions.

Stretching the rules might save money in the short term, but it often backfires. Be wary of overly complex tax shelters, too-good-to-be-true deductions, or offshore strategies with murky legal footing. The IRS has caught onto most of these schemes and now flags them with high priority. Conservative, well-supported tax positions are always safer than creative ones that can’t stand up to scrutiny.

Report all income sources.

It’s easy to forget a small 1099 or miss a crypto sale, especially if you have multiple accounts and assets. But the IRS has advanced matching systems and increasingly uses AI to catch discrepancies. Under-reporting—even unintentionally—can trigger penalties and open the door to a full audit. Make sure every dollar earned, from dividends to side income, is properly reported.

Don’t wait for the IRS to contact you.

If you spot a mistake on your return, address it immediately. Filing an amended return can limit your exposure and may reduce penalties. Acting in good faith shows the IRS you’re trying to stay compliant, which can go a long way if problems arise later. Silence or delay, on the other hand, can escalate the situation and leave you with fewer options.

Protect What You’ve Earned

The IRS isn’t targeting you to be unfair—it’s doing its job. But if you’re a high-income earner, you do need to be more careful. With more money comes more risk and more responsibility to get it right.

If you’ve received a letter from the IRS or think you’re at risk of being audited, don’t try to handle it on your own. At The Law Offices of Alyssa Maloof Whatley, we help high earners in Atlanta respond with confidence and protect what they’ve built. Let’s talk about how we can help you stay one step ahead.

Frequently Asked Questions About High-Income Earners and the IRS

What income level triggers increased IRS scrutiny?

While there’s no official cutoff, IRS data shows that individuals earning over $400,000 are more likely to be audited—especially if they have complex returns or significant deductions.

Can I be audited even if I didn’t do anything wrong?

Yes. IRS audits aren’t always about catching wrongdoing. Sometimes, your return is selected due to random sampling, document mismatches, or statistical red flags—even if you filed everything correctly.

What documents should I keep to protect myself in case of an audit?

Keep receipts, bank statements, 1099s, W-2s, charitable donation records, travel logs, and supporting documentation for any deductions or credits you claim. Digital copies are fine as long as they’re clear and organized.