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The words “tax audit” strike fear into the hearts of many people. Nobody likes to think that an audit can happen, and even if only a small portion of the population is audited, that’s a concern for most taxpayers.

The reality is that the IRS only flags about 1-2% of the returns it receives for further audit, half of them being taxpayers earning over $1 million a year. Of course, most of us fall well below this amount, but certain situations can still trigger an audit, especially for small businesses. Let’s take a look at some of these common situations.

1. Makearn lots of money

As we mentioned earlier, earning a lot of money could attract the attention of the IRS. That said, if you’re concerned about how much you’re earning and it warrants government verification, contact a tax officer for information. This is especially recommended if you own a small business, as an accountant can offer advice and guidance on a host of financial topics.

2. Do lots of cash deals

You might be more likely to be audited if you run a business that deals with cash transactions. Indeed, the IRS has found that these businesses sometimes “forget” to report income that should be recorded. Cash-rich businesses that may attract the attention of the IRS include hair salons, convenience stores, car washes, laundromats, and restaurants, to name a few.

3. MakMathematical errors in your return

If you manually complete your tax return, be sure to check it before submitting. Addition or subtraction errors will result in flagging your return, even if the error is in favor of the IRS. To avoid human error when filing your tax return, commit to using one of the many online tax preparation platforms available.

4. Filean appendix C

As a small business owner, you’ve probably filed a Annex C, especially if you are filing as an individual. This form allows you to report your business income. Unfortunately, this also puts you in the group of statements most likely to be verified. There’s not much you can do about this except to make sure you have all the documentation to back up your claims if you get audited.

5. Takehome office deduction

If you regularly work from home and do so in a dedicated part of your home, you may be able to take the home office deduction. This deduction allows you to deduct part of the cost of said dedicated space. Unfortunately, claiming this deduction may trigger an audit, but depending on how much the deduction saves you, it may be worth the risk.

6. Claim a loss year after year

The IRS doesn’t like to see that you’ve lost money repeatedly. If your tax return shows that your business has operated at a loss year after year, they may dispute whether you are running a legitimate business. Some people like to deduct expenses related to their hobbies as if they were part of running a business, which is illegal, and that’s the kind of thing the IRS is trying to catch.

Every taxpayer fears that the IRS will single them out for an audit. While audits only affect about 1-2% of the population, they can happen to anyone. So, obey the applicable tax laws and keep in mind the situations mentioned above. If you’re still worried, consider working with a reputable tax professional to avoid being audited next tax season.