Major IRS Audit Triggers Every Small Business Should Understand

As IRS staffing shortages continue, enforcement hasn’t slowed—it’s shifted. This discussion covers how automated data matching now drives audit selection, why mismatched K-1s, W-2s, and 1099s are quickly flagged, and how deductions like vehicle use, home office expenses, and charitable contributions often trigger follow-up reviews. We also address the growing scrutiny around cryptocurrency transactions and the risks of blending personal and business expenses. Proper documentation and disciplined accounting practices play a critical role in surviving automated IRS reviews.

Key Takeaways

• Why IRS staffing shortages have actually increased reliance on automated audits
• How income mismatches between K-1s, W-2s, and 1099s quietly trigger reviews
• Which deductions raise the most red flags when software scans your return
• Why cryptocurrency activity is drawing growing IRS attention
• How small “personal expense creep” can compound into bigger compliance issues
• What proper documentation really needs to look like in an automated review