While I don't think #2 is a red flag per se, I pretty much agree these are some of the areas that can cause an IRS audit. But how the IRS selects tax returns for audit is a well kept secret. Nobody really knows.
http://money.cnn.com/gallery/pf/taxes/2013/03/21/tax-audit/index.html
http://money.cnn.com/gallery/pf/taxes/2013/03/21/tax-audit/index.html
- You have foreign assets
- Your ex wants revenge
- Your return has too many zeroes
- You have a home office
- You forgot some income
- You claim fishy deductions
- You're rich
- You say the wrong things
- You do a lot of 'work-related' driving
- You exaggerate donations
- You own a money-losing business
- You have a shady tax preparer