Although the individual audit rate is down (.96%) and expected to drop lower due to IRS budget issues, there are a few items that could make a taxpayer more likely to fall into that small percentage.
So although the odds are low, these items tend to draw extra attention:
1. Claiming 100% business use of a vehicle.
2. Deducting business meals, travel and entertainment on Sch C
3. Writing off hobby losses, if you have wage income and also file a Sch C and the activity really sounds like a hobby.
4. Deducting rental losses, especially for those claiming to be rental real estate professionals.
5. Running a small business, especially a cash intensive business.
6. Not reporting a foreign bank account.
7. Claiming deductions higher than average.
None of this means that a taxpayer shouldn’t take each and every deduction to which entitled. Just be aware that you may be more likely to have a need to produce those receipts. Anyone with proper support for a write-offs, should take it!
info from Kiplinger Tax Letter. Vol 89 No. 2 1/17/2014.