Beware These Tax Audit Red Flags

Tax day is looming -- there's about a week left to file. But just because you're running low on time, that's no reason to be careless. Your return sends all sorts of messages to the IRS, and there are a few red flags which can trigger an audit.

You might already know some of the biggest audit flags, but Bargaineering recently listed a half-dozen you should be aware of when you complete your Federal return this year. Of course, just because your return includes one or two of these red flags, it does not mean that you'll necessarily be audited. But there's clearly more risk, so you should be extra careful that you're coloring within the lines.

A large change in income. Large changes in income should be clearly explained through W-2's or 1099's.

A loss on a small business. The IRS is guaranteed to take a hard look at business losses. If you are audited you will need to show that your business is legitimate (not a hobby) and provide detailed proof of the loss.

Large charitable contributions. Unless you're Bill Gates or Bruce Wayne, the IRS will scrutinize generous contributions.

A home-office deduction. This is the mother of all red flags. The IRS is especially concerned if you have salaried income in addition to a home office, but even if you're self-employed, a home office deduction is easy to abuse.

Large business meal & entertainment deductions. These deductions are fraud magnets, and therefore get a lot of scrutiny from the IRS.

Large casualty losses. If you suffered a significant casualty loss last year, read what the IRS has to say about Casualty, Disaster, and Theft losses before you file.

Rental losses. Like casualty losses, this is another complicated section of the tax code.