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Question about Schedule C deduction limits

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R

reklaw

Guest
I am a new sole proprietor of a business. This year I had expenses of $18,010 on a gross income of 84,180. My question is this: Does an 18 grand total deduction on my Schedule C pose a red flag for an IRS audit for someone with my income and being self employed?

Like I said, I am a new sole person in my business and I have heard that the IRS scrutinizes the self employed and I just wanted to know if there are red flag limits for audits for us self employed.

I know the standard answer of "If you spent that much and can account for it, then no problem". But if this is going to trigger a red flag, then next year I am not going to spend as much on my business.

Thank you in advance for your answer.

Reklaw
 


L

loku

Guest
Expenses of $18,000 for a new business with a gross of $84,000 are certainly not large enough to raise a flag. However, if any of the specific deductions are obviously out of line or questionable, then that could bring on an audit. For example, if cost of sales is unreasonably high in relation to sales, that could increase the chance of audit. You are entitled to deduct all the actual costs of doing business.

If you are serious about wanting to minimize your chance of audit, then I suggest you have your taxes prepared by a professional.
 

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