What are the most common reasons for audits?

What are the most common reasons for audits?

Some of the common areas are low net profit on Schedule C with a home office expense being claimed. So, for example, if you're self employed and you gross $150,000 and you net $10,000, that's sort of very suspect and that would be ripe for audit. Generally they want you to net 50% of your gross on a Schedule C. Another example would be a client who has a long history of problems with the IRS regarding not properly filing and paying the payroll taxes, not being a willing complier with the IRS code. There, you're apt to get audited more often based on attitude. The third one that recently comes to mind is not a return that I prepared but a new client that saw on TV or in a magazine or newspaper, some firm that was telling them how they can avoid paying taxes by creating trusts and offshore accounts and going through a whole scenario of obviously fraudulent behavior. This guy, who was duped into paying them a huge sum of money to put into this was audited by the IRS because of it. And I found that by going along and agreeing that yes, this guy was duped, and that yes, we want to do the right thing, I was able to work out a very favorable settlement for him so that he was able to immediately get rid of these entities and pay the proper taxes that were due and the IRS was happy to forgive and forget.