Money Talks: 3 Ways to Avoid a Tax Audit

It doesn't take a rocket scientist to figure out Uncle Sam is hungry for money right now.

And one way of finding it? Tax audits. For obvious reasons, the IRS is never going to reveal exactly how they choose returns for an audit. But there's are definite no-nos you should avoid.

Example? Wrong preparer. If the IRS believes your accountant is claiming fake deductions, they could audit all of their clients. So beware of bold claims.

Frank Gutta,CPA, says, "You know anyone who says that I can guarantee you that you're going to get a refund, that's just impossible." :06

Red flag number 2: Calling something a business and deducting losses on it when it's actually a hobby, thus not eligible for deductions. To qualify as a business, sooner or later it has to show a profit.

Gutta says"Generally when you're into the third year, to show a loss -- the IRS might consider that to be a hobby."

And speaking of a small business, according to the Wall Street Journal, people who write off business expenses on a Schedule C are ten times more likely to get audited than those who incorporate.

Another potential red flag? Taking deductions for things like charitable contributions that are large relative to your income.

Bottom line? You should always take the deductions you're entitled to, red flags or not. But if you're in a gray area? Document everything. I've got 5 more audit triggers you should watch for waiting for you right here at