Q: What red flags may spark an audit?
A: There are many thing that can spark an Audit, however it is generally a good rule to have proper substantiation to back your claims in the event you are "The Chosen One". On the whole, audits are the exception and not the norm. Audits can be triggered by claiming lots of expenses, and weighing these expenses against a proportionally smaller income. A similar reason for an audit is taking lots of Sch C deductions based on what the IRS sees as a "hobby" and not a genuine sole-proprietorship, especially if losses are repeatedly claimed year after year. Audits can also arise from under-reported or unusually high/low income. The most important thing to do when chosen for Audit is to have good representation to ensure a statistically proven and more favorable outcome in the end.