The IRS verifies tax returns by automatically matching data from employers, banks, and financial institutions (W-2s, 1099s) against reported figures. Suspicious returns or identity theft triggers are addressed via mail, requiring taxpayers to verify their identity and return details online at idverify.irs.gov or by phone. Audits, conducted by mail or in-person, examine detailed records.
When the IRS is questioning whether a return is legitimate, it will send taxpayers a letter asking them to authenticate their identity, and it will not process their return and issue their refund until the taxpayer responds to the letter and completes the authentication process.
The identity verification process from the IRS can be triggered on a random basis, or it could be due to suspicion that a tax return with your name on it is potentially the result of identity theft.
The IRS will check the data in the return for mathematical errors. It will verify filing statuses, exemptions and deductions and ensure you are legally entitled to any credits claimed on the return. It will also look for any indicators of tax fraud.
Your refund
It may take up to 9 weeks to process your return after you verify it.
The IRS uses a combination of automated and human processes to select which tax returns to audit. Not reporting all of your income is an easy-to-avoid red flag that can lead to an audit. Taking excessive business tax deductions and mixing business and personal expenses can lead to an audit.
Once their identity has been verified, they can securely access IRS online services. Taxpayers who need help verifying their identity or submitting a support ticket can visit the ID.me IRS Help Site.
The biggest tax mistakes people make include filing late, math errors, incorrect personal info (like Social Security numbers), forgetting deductions/credits (like EITC), misreporting income, not signing forms, and making errors with bank details for direct deposit, all leading to delays, penalties, or missed savings, with using tax software or professionals helping avoid these common pitfalls.
The tracker displays progress through three stages: Return Received. Refund Approved. Refund Sent.
Be ready to verify your identity when calling the IRS
Taxpayers whose tax returns have been flagged for possible IDT should receive one of the following letters: Letter 5071C, Potential Identity Theft during Original Processing with Online Option – Provides online and phone options and is issued most widely.
The Taxpayer Protection Program will identify a suspicious tax return filed with your name and SSN and will send you a letter to let you know. The letter will ask you to verify your identity and tax return information.
The IRS does not check every tax return. It does not check the majority of them, but the IRS implements methods that track certain factors that would result in a further examination or audit by them.
The IRS $600 rule refers to a change in reporting requirements for third-party payment apps (like Venmo, PayPal) for taxable income from goods and services, where platforms must send a Form 1099-K if you receive over $600 in a year, intended to capture gig economy/side hustle income, though delays and phased implementation have adjusted the timeline, with current rules for 2024 using a higher threshold ($5,000) before fully phasing to $600 for future years, but remember all taxable income, regardless of form, must always be reported.
Common IRS audit triggers
IRS Warning Signs of Federal Tax Evasion
Different amount: If the refund isn't the amount you expected, you should receive a notice explaining why. If you don't receive a notice or you believe the IRS changed your refund incorrectly, contact the IRS or order a transcript to find out about any IRS changes.
The IRS "Dirty Dozen" is an annual list of the most common and dangerous tax scams, compiled to warn taxpayers about schemes that aim to steal money, personal information, and data, often peaking during tax season but occurring year-round. Key threats on recent lists include phishing emails, bad social media tax advice, fake charities, scams related to COVID-19 relief, fraudulent fuel/family leave credit claims, and "ghost" tax preparers. The IRS urges vigilance against these tactics, emphasizing that these schemes can lead to identity theft, financial loss, and even criminal penalties.
If the deductions, losses, or credits on your return are disproportionately large compared with your income, the IRS may want to take a second look at your return. Taking a big loss from the sale of rental property or other investments can also spike the IRS's curiosity.
Notices – The IRS will start sending you notices a month or two after you miss a tax deadline. Penalties and interest – If you don't respond to notices for missed tax payments, you'll continue to accrue penalties and interest.
The return will be rejected and investigated as identity theft/tax fraud if: verification fails to confirm your identity or that you filed the return. if the verification process is not completed, or can't be completed.