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The key to avoiding an audit appears to lie in being inconspicuous. Some factors are of course beyond your control. The more you make, for instance, the more likely you are to be audited. The IRS has also shown a statistical probability that those who are self-employed are more likely to misstate income and deductions than those with salaries. You probably don’t want to purposely make less or change your business in order to avoid an audit. But below are listed some IRS red flags on which you can have an affect.

The first category is one especially important to MLM business people and direct sellers- business expenses. IRS tax examiners refer to deductions for home offices, business travel, and entertainment, and business use of an automobile as the “kiss of death.” Because they are often abused the IRS gives them closer-than-usual scrutiny, and requires strict documentation. The IRS often challenges these deductions knowing that many people do not keep the proper records and will not be able to defend their claims. The obvious solution for the taxpayer claiming these deductions is to carefully document the expenses.

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