3 Red Flags That Can Trigger an IRS Audit

The IRS doesn't audit randomly. Here are three red flags that put you directly on their radar. Number one, excessive charitable contributions. Donating to charity is great, but if your charitable deductions are unusually high relative to your income, the IRS notices. If you're reporting $80,000 in donations on $120,000 income, that's a red flag. They want receipts. They want documentation. And if you can't back it up, you're in trouble. Red flag number two, claiming a home office deduction. That's one that gets people every time. A home office deduction is legitimate, but only if that space is used exclusively and regularly for business. Not your kitchen table, not a guest room with a desk in the corner. If it's not a dedicated space, don't claim it. The IRS looks at this closely, especially for W-2 employees. Red flag number three, large cash transactions. If your business runs heavily on cash and you're reporting significantly lower income than what your lifestyle or industry suggests, that's a pattern the IRS looks for. Banks are also required to report cash transactions over $10,000. Structuring deposits to stay under that threshold? That's a separate federal crime entirely. Got audited over any of these or worried you might? Call us for a free consultation before the IRS makes the first move.