7. Running A Self-Employed Business
Schedule C is a business income tax form for self-employed people. For some of these people, this tax form may be a treasure trove. But IRS agents know from experience that sole proprietors sometimes tend to claim extra deductions while not reporting all their income. The IRS analyzes both top-grossing sole traderships and smaller ones.
Here’s a list of the most common situations that could trigger an IRS Audit:
- Self-employed people who declare at least $100,000 of the company’s gross sales on Schedule C
- Cash-intensive businesses (retail stores, restaurants, cigarette distributors and the like)
- Sole traders who have income from other sources but still report a substantial loss.
