IRS Audit Red Flags: How to Minimize Your Risk While Maximizing Deductions
Okay, real talk: the word “audit” can send a chill down anyone’s spine. But guess what? You don’t have to live in fear if you follow the rules (and keep receipts. So many receipts).
Home Office Deduction: Yes, you can deduct your Zoom corner—if it’s really used for business. No mixing and matching with your living room yoga space.
Business Vehicle Expenses: Keep a mileage log or track actual costs. Don’t claim your weekend getaway unless it was truly, legitimately business (no, your dog’s birthday party doesn’t count).
Consistent Income Reporting: Report all your 1099s, W-2s, and other docs. Missing income forms? The IRS doesn’t appreciate “Oops, I forgot that one.”
Travel & Entertainment: You can’t deduct Coachella (sorry). Only claim legitimate business-related events and keep all that glorious proof.
Schedule C Shenanigans: Sole proprietors often get extra scrutiny. Don’t panic—just keep detailed records of income and expenses.
Audit-Ready Systems: Document, document, document. Keep digital files in neat folders so if the IRS does knock, you’ll just say, “Sure, here’s everything you need.”
Bottom Line: Be thorough, honest, and organized. Audits aren’t fun, but you can minimize your risk by playing by the rules—and still taking every deduction you deserve.