As the IRS finds itself more and more stretched, the likelihood of an audit may decrease. However, there are a number of “red flags” which can draw the IRS attention to your return. Here are some of the items which gain their attention.
- Claiming 100% business use of a vehicle
- Large Schedule C deductions for business meals, travel and entertainment
- Hobby losses, especially if it sounds like a hobby, such as car racing and dog breeding
- Rental losses, especially those written off by individuals with high W-2 income
- Small business, especially high cash businesses, pizza shops, restaurants taxis, car washes, hair salons
- Claiming deductions that are higher than the average
- Failure to report a foreign bank account