IRS Audit Odds

Who runs the greatest risk of being audited?

Uber Rich – 1 of 3, 34.69%, reporting over $10 million were audited in 2015.

Millionaires – 1 of 10, 9.55%, reporting over $1 million.

Incomes of > $200,000 – 1 of 38, 2.61%.

Sole proprietors – 1 of 50, 2-2.5%.

Earned Income Tax Credit – 1 of 57, 1.75%.

Red Flags:

Large charitable write-offs
Business meals and entertainment
100% business use of a vehicle
Large losses on Sch C on an activity that looks like a hobby
Day trading losses on Sch C
Deducting rental losses
Deducting alimony
Failing to report overseas bank accounts