Earned income tax credit

Suzie11 · ‎February 18, 2022

I have 2 sources of income that the IRS considers self-employment. The first one is dog sitting/boarding where I made roughly $5300 and the other one is selling baked goods and my crochet creations making about $2500. I have no credit card transactions or 1099s to prove that I made this income if I was to be audited. I read that self-employed people are a lot more likely to be audited. Should I be afraid of being audited? What can I do to lower my chances of being audited?

ThomasM125 · ‎February 18, 2022

It is less likely you will be audited due to the minimal amount if income you are reporting as compared to someone who made substantially more money. The best thing to do to prevent an audit is to report expenses that are ordinary and necessary for your business. Stray away from controversial areas such as vehicle and meal/entertainment expenses.

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Mike9241 · ‎February 18, 2022

i wouldn't worry. the IRS only audits about 1% of the returns and concentrates on those with the highest income because that's where the biggest adjustments come. there is no way to absolutely prevent an audit since some returns are selected at random. some advice. have a separate bank a/c for your business. deposit all receipts and pay all bills using this a/c. then you can make transfers to your personal account to pay personal bills.