Why this matters
The IRS doesn't pick returns at random — its systems score returns against norms and cross-match every 1099 filed under your SSN or EIN. Most trouble isn't a dramatic audit; it's an automated mismatch letter that costs you months of correspondence. A 15-minute review before e-filing prevents most of it.
What "done" looks like
- Every 1099-NEC and 1099-K you received is reflected in reported income
- No suspiciously round numbers in expense categories
- Big deductions have documentation you could produce tomorrow
- Home office, vehicle, and meals entries match actual records
How to do it
- Reconcile income against 1099s — the IRS matches these automatically; income below the sum of your 1099s is the classic trigger.
- Scan for round numbers — real books produce $4,912, not $5,000. Estimates read as estimates.
- Sanity-check deduction ratios — any expense line outsized relative to revenue needs receipts behind it.
- Review the risky categories — vehicle use, home office, meals, and travel draw the most scrutiny; make sure each matches a log, not a guess.
- Run TurboTax's final review and actually read the flags instead of clicking past them.
Common mistakes
- Reporting only what hit your bank account and ignoring a 1099-K from a payment processor
- Claiming 100% business use of the only vehicle you own
- Rounding every expense category, which reads as invented numbers
Real-world examples
- The IRS CP2000 "underreporter" program automatically mails notices when return income doesn't match third-party 1099 and W-2 data — no human audit needed to start one.
- Schedule C businesses reporting losses year after year are a documented IRS focus area because of the hobby-loss rules.
From a founder's point of view
A red flag isn't a reason to skip a legitimate deduction — it's a reason to have the paper behind it. The goal isn't an invisible return; it's a return where every flagged line has a boring, documented answer.
Rule of thumb
Claim everything you can document; claim nothing you'd struggle to explain in one sentence with a receipt in hand.