What commonly triggers an IRS audit?

The correct answer highlights that discrepancies in reported income and flagged deductions are key indicators that can trigger an IRS audit. The IRS uses sophisticated algorithms and data analysis techniques to identify inconsistencies between the income reported on tax returns and the income information that they receive from third parties, such as employers, banks, and other financial institutions. When the tax return shows significant discrepancies or unusual deductions that do not align with the taxpayer's reported income, it raises red flags, prompting the IRS to conduct a more thorough review of the taxpayer's financial matters.

For example, if a taxpayer reports a high level of deductions that far exceeds what is expected based on their income level, or if income reported from various sources does not match the figures submitted on the tax return, the IRS may initiate an audit to rectify these inconsistencies. This focus on accuracy aims to ensure compliance with tax laws and minimize tax evasion.

The other possibilities do not carry the same weight in triggering audits. High income levels alone might not trigger an audit unless accompanied by other factors, such as discrepancies. Filing for deductions without itemizing typically does not raise alarms unless the deductions themselves are questionable, and frequently filing extensions does not automatically imply a need for audit scrutiny, as many taxpayers file extensions for legitimate reasons.