Avoiding Audits
Though the IRS randomly selects returns for audit review, it will tag certain returns because of “suspicious information” or deductions. To reduce your business’ risk of being audited, avoid these common IRS red flags:
• Incomplete or inaccurate income reports
• Unusual or above-average deductions
• Business losses, especially tax losses.
If you decide to take legitimate deductions for business losses, keep all supporting documentation. To be extra safe, attach copies of the documentation to your return.