What can I do to lessen my chances of being audited?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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Written by Jeffrey Johnson
Insurance Lawyer Jeffrey Johnson

UPDATED: Aug 19, 2012

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The IRS typically looks for discrepancies in the following: Schedule A (itemized deductions, Schedule C (profit or loss from a business) and Schedule F (profit or loss from a farm). For Schedule A, in which you itemize deductions for such items as charitable expenses and mortgage interest, the IRS tends to audit a smaller percentage of returns where the deductions are less than 35% of adjusted gross income. If you go above 44%, your risk of audit increases substantially.

If you file a Schedule C for your business, try to keep expenses under 52% of gross income. Any expenses over 67% of income is a red flag to the IRS for an audit. With Schedule F, losses over 50% of gross farm income invite scrutiny, while losses over 71% may trigger an audit. If you file both a Schedule A and a Schedule C, add your Schedule C expenses as a percentage of gross income with 1.5 times your Schedule A expenses as a percentage of your total gross income, and keep this figure under 10% of your income.

Finally, no matter what you do, there is no avoiding a random audit. More than 150,000 taxpayers are subjected to random audits each year.

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