Red Flags That May Trigger an IRS Audit

The possibility of an IRS audit can be worrisome. To prepare, consider the following 10 red flags that may potentially lessen your chances of an IRS examination.

1. Not reporting all income from third-party payers
2. Missing deadlines
3. Being self-employed
4. Collecting valuable fringe benefits
5. Claiming losses from part-time activities the IRS considers a hobby
6. Dealing in cash
7. Setting up an illegal trust
8. Stepping out of bounds
9. Deducting prohibited or suspicious items
10. Being a “tax protestor”

The Weaver newsletter article, Red Flags That Can Trigger an IRS Audit, elaborates further on each of these items. Keep in mind, though, that these 10 items are only some of the potential IRS red flags, and they can change at any time.

There is no guarantee of preventing a random IRS audit, so keeping meticulous records to support your tax return is always a smart move.