Retiring changes how your money arrives, but it doesn't take you off the IRS's radar. If your income is above the filing threshold, you still file a return every year, and that return can be selected for review.

The overall odds of being audited are low though. The IRS examined roughly 0.36% (or 1 in every 280) of individual returns filed for tax year 2025, and most individual audits are now handled entirely by mail. Retirees face a particular risk, though: Social Security, pensions, IRAs, and brokerage accounts each report to the IRS on a separate form. Every form is another chance for a mismatch.

Below are the seven issues most likely to put a retiree's return in front of an examiner, including changes from the One Big Beautiful Bill Act (OBBBA) that apply to 2026 returns.

1. Income that doesn't match your 1099s

The IRS automatically compares your return with the forms it receives: SSA-1099 for Social Security, 1099-R for pensions and retirement accounts, and 1099-INT, 1099-DIV and 1099-B for investments. Leave one off, such as a small 401(k) from an old employer or interest from a forgotten savings account, and the computer flags the gap. The usual result is a CP2000 notice proposing more tax, interest, and sometimes a 20% accuracy penalty.

Before you file, line up every form you received against last year's return. If an account showed up last year and has no form this year, find out why.

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2. Errors in how Social Security is taxed

Up to 85% of your Social Security benefits can be taxable, depending on your other income. Miscalculating that share, or leaving benefits off entirely, is easy for the IRS to catch because the Social Security Administration reports every dollar.

OBBBA did not eliminate tax on Social Security. Instead, it added a temporary deduction of up to $6,000 per person age 65 or older for tax years 2025 through 2028. It phases out once modified AGI passes $75,000 ($150,000 for joint filers), requires a valid Social Security number, and isn't available if you're married filing separately. Claiming the full amount when your income is over the limit is an easy error for the IRS to correct.

3. Required minimum distribution mistakes

Most retirees must begin required minimum distributions (RMDs) at age 73; those born in 1960 or later start at 75. Missing an RMD, or taking too little, triggers a 25% excise tax on the shortfall. That drops to 10% if you take the missed amount and file Form 5329 within the correction window, and the IRS can waive it for reasonable cause.

Also check the taxable amount you report. Rollovers, Roth conversions and after-tax contributions all change how much of a distribution is taxable, and a mismatch with your 1099-R invites questions.

4. A sudden spike in income

Selling a home or business, a large Roth conversion, or a year of big capital gains can push your income sharply higher. IRS data consistently shows audit rates rising with income, with the highest rates on returns reporting $1 million or more.

Higher income isn't the problem; undocumented income is. Keep closing statements, cost-basis records and receipts for home improvements. Married couples can exclude up to $500,000 of gain on a primary home ($250,000 for single filers) if they meet the ownership and use tests.

5. Large or poorly documented charitable gifts

Charitable deductions that look out of proportion to your income draw attention, especially gifts of property. Any single gift of $250 or more needs a written acknowledgment from the charity. Noncash gifts over $500 require Form 8283, and most items valued over $5,000 need a qualified appraisal.

Two changes start in 2026. If you itemize, only giving above 0.5% of your AGI is deductible. If you take the standard deduction, you can now deduct up to $1,000 of cash gifts ($2,000 for joint filers).

If you're 70½ or older, a qualified charitable distribution (QCD) is often cleaner. You can send up to $111,000 in 2026 directly from your IRA to charity; it stays out of your income and counts toward your RMD. Report the full amount as a gross distribution, reduce the taxable amount by the QCD, and write "QCD" beside it.

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6. Unreported gambling winnings or overstated losses

Starting in 2026, casinos issue Form W-2G for slot and bingo wins of $2,000 or more, up from $1,200, and send a copy to the IRS. But all gambling winnings are taxable, with or without a W-2G. Recreational gamblers report them as other income on Schedule 1 of Form 1040.

Losses are deductible only if you itemize, and only up to your winnings. Beginning with 2026 returns, OBBBA limits that deduction to 90% of your losses, so even a break-even year can leave taxable income. Keep a log of dates, locations and amounts won and lost, plus your player's-card statements. Unless gambling is your profession, travel, hotel and meal costs aren't deductible.

7. Side income and repeated business losses

Plenty of retirees keep working a little, whether that’s consulting, freelancing or selling things online. That money is taxable even if you never get a tax form for it. And you may not: starting with 2026 payments, clients only have to send you a 1099-NEC if they pay you $2,000 or more, and payment apps like PayPal and Venmo send a 1099-K only after $20,000 and 200 transactions. One more thing to watch: if your side business shows a loss year after year, the IRS may ask whether it’s really a business or just a hobby.

What to do if you get an audit letter

Don't ignore it. Confirm the letter is genuine (the IRS starts contact by mail, not by phone, text or email), note the response deadline, and send only the documents requested. If the notice covers several years, large dollar amounts or penalties, get professional help before you reply. For more ways to stay off the IRS's radar, see our tax tips for those over 50 and in retirement.

Retired and hearing from the IRS? Talk with a Top Tax Defenders tax professional in a free, confidential consultation. Schedule your free consultation → or call (866) 237-6545.

Frequently Asked Questions

Are retirees more likely to be audited by the IRS?

Not because of age. The IRS selects returns based on income mismatches, unusual deductions and income level, not birth date. Retirees can face more mismatch risk, though, because their income often comes from several accounts that each report to the IRS separately.

Do I still have to file a tax return after I retire?

Often, yes. Whether you must file depends on your gross income, filing status and age. If your only income is Social Security, you may not need to file, but pension, IRA, investment or part-time income can push you over the filing threshold.

What happens if I miss a required minimum distribution?

The IRS charges a 25% excise tax on the amount you should have withdrawn. That drops to 10% if you take the missed distribution within the IRS correction window. You report it on Form 5329 and can ask the IRS to waive the penalty if the miss had a reasonable cause.

Will a casino jackpot trigger an IRS audit?

A jackpot alone won't, but failing to report it can. Starting in 2026, casinos send Form W-2G to the IRS for slot and bingo wins of $2,000 or more. If that income isn't on your return, expect a notice. All gambling winnings are taxable, even without a W-2G.

Does claiming the new $6,000 senior deduction increase audit risk?

Not if you qualify. You must be 65 or older by the end of the year, have a valid Social Security number, and file jointly if married. The deduction shrinks once modified AGI passes $75,000 ($150,000 for joint filers), so claiming the full amount above those limits can draw an IRS correction.

How far back can the IRS audit a retiree's return?

Generally three years from the date you filed. The window extends to six years if you left out more than 25% of your income, and there is no time limit for fraud or for years you never filed.

What should I do if I receive an IRS audit letter?

Read it carefully, note the response deadline, and don't ignore it. Send only the documents it asks for. If the letter questions large amounts, several years or possible penalties, talk with a tax professional before you respond.