5 Most Common IRS Audit Red Flags

1. Self-employment Income

Self-employed individuals have more opportunities for unreported income or exaggerated deductions, making them a focus for potential audits. Sole proprietorship and partnership are the simplest forms of self-employment and can potentially lead to underreporting income. According to Brookings Institution, over 60% of farm and sole proprietorship income is not reported to the government.

You can also take a look at 15 States That Don’t Tax Social Security Or Pensions and States With the Lowest to Highest Capital Gains Tax Rate