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Your risk of being audited is less than 1 in 50 unless . . . you are waving a big red flag that says "here I am, audit me." Well, okay, their really isn't a flag and it doesn't have writing but there are 10 areas that will make your tax return more likely to be pulled for an audit.

1)	At the top of the list is being self-employed. That means being a sole proprietor and filing a Schedule C with your 1040. It's simple to reduce this risk, become an S-Corp, C-Corp or an LLC.
2)	Taking a home office deduction. These rules are complicated which means an IRS agent figures there is a good chance you may have overstated your deduction. Make sure you have all the documentation required and you can verify that you use the space exclusively for your business.
3)	Incorrect math. If you have mistakes in adding and subtracting the numbers on your return, an IRS agent is going to question whether you have mistakes in keeping your records as well.
4)	Rounding the figures. Having several numbers that end in zero such as 10,000, 5000 and 2500 have a tendency to wave the flag. An agent is going to wonder if you are rounding and guessing rather than keeping accurate records. If your numbers truly end in zeros make sure you can prove it.
5)	Lifestyle. If your expense to income ratio doesn't equal your lifestyle the IRS is going to wonder how you can afford run your business and live the style you are living. Finding the income needed to support your lifestyle will be the agent's top priority.
6)	Excessive Expenses. Deducting expenses worth 65 percent or more of your gross income is likely to raise an eyebrow or two. With the exception of start-ups, this isn't good.
7)	Showing Losses. While suffering losses is normal for start-ups, it isn't normal year after year. The IRS will come knocking if you keep showing losses.
8)	Incorrect identifying information. Make sure your EIN, SSN and other pertinent information is correct. If you look like you don't want to be identified the IRS will opt to take a closer look.
9)	File the Right Forms. I have recently run across a rash of companies that thought there are one form of entity and the IRS states they are another. Make sure you know how your state and the IRS classify your company. Filing a 1120S instead of an 1120 (or visa versa) is a very big red flag.
10)	Sign, Date and File. Yep, many people forget to sign and date their returns. Some even forget to put the darn thing in the mail.

Stop waving the big red flag. Proofread your return. Check for errors and mistakes. If you have your return prepared for you ask questions, proofread your return and check for errors. Remember, you are the one who is ultimately responsible for the information on the return no matter who prepares it.

If you would like additional information or would like assistance, please email or call us (406-216-2224). We would be delighted to help you.