While the IRS may conduct an audit from a sample of taxpayers at random, some audits are spurred when there is a red flag associated with your filing. Common things that may spur an audit include:
• Data entry errors, such as not typing or writing in your Social Security Number correctly or making a math error
• Unreported income that does not match with other tax records that have been prepared by your employer, clients or others
• Claiming too many deductions that you are not eligible for
• Using the wrong filing status
• Claiming non-existent dependents
• Having self-employment income, especially when you do not report a profit for at least three out of the last five years
• 1099 income doesn’t match what’s on your tax return.
• Lack of proper documentation if your business could also be treated as a hobby.