Check out the other audit risks
Income Risk Large Itemized Deductions Unreported Income
Rental Income Self-Employment Home Office
Unreported Alimony Automobile Expenses
High-Risk Tax Audit Areas Related to Unreported Taxable Income
High DIF
IRS computers compare all tax returns to the national Discriminate Information Function (DIF) system average. The IRS calculates the DIF score by using a closely-guarded formula. Tax returns with the highest DIF scores are scrutinized by experienced IRS examining officers who determine which tax returns provide the best chance for collecting additional taxes, interest, and tax penalties.
Unreported taxable income is a very common red flag for an audit. If the IRS finds unreported taxable income by matching income from your tax return with information from banks and other financial institutions, this will increase the chance of an audit. You must ensure that you report all 1099 forms from bank savings accounts, mutual funds and others.
Defend Yourself!
You are entitled to take every tax deduction that you qualify for and you should never be scared by the potential of an IRS tax audit. You must use common sense when making decisions about deductions and hire a qualified CPA to help you through the minefield of taxes