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Ten IRS Audit Red Flags for Self-Employed Individuals

The article from Kiplinger discusses several red flags that can increase the likelihood of an IRS audit for self-employed individuals. Key points include: discrepancies between income reported on tax returns and what's reported on 1099 forms, claiming high expenses relative to income, especially in categories like home office, travel, or meals, which are often scrutinized. Other flags include taking large deductions for business use of a vehicle, especially if it's close to 100%, or claiming losses year after year, which might suggest a hobby rather than a business. Additionally, the IRS might look into cash-based businesses due to the potential for unreported income, and any significant changes in income or deductions from previous years can trigger an audit. The article advises keeping meticulous records, understanding what constitutes a legitimate business expense, and possibly consulting with a tax professional to ensure compliance and minimize audit risks.

Read the Full Kiplinger Article at:
[ https://www.kiplinger.com/taxes/irs-audit-red-flags-for-self-employed ]