Schedule C Audit

What is a Schedule C audit?

A Schedule C audit is an IRS audit of a taxpayer's Schedule C, which is used to report income and expenses for a sole proprietorship or single-member LLC. The IRS may conduct a Schedule C audit if they suspect that the taxpayer has underreported income or overstated deductions on their tax return.

What triggers a Schedule C audit?

There are several factors that may trigger a Schedule C audit, including:

• Reporting a high amount of income on Schedule C
• Claiming a large number of deductions on Schedule C
• Reporting losses on Schedule C for multiple years
• Filing a Schedule C as a part-time business
• Filing a Schedule C for a business that has never made a profit

What should I do if I am being audited for my Schedule C?

If you are being audited for your Schedule C, it is important to respond promptly and provide the IRS with all requested documentation. You may want to consider hiring a tax professional to represent you during the audit and help ensure that your rights are protected.

What are the potential consequences of a Schedule C audit?

The potential consequences of a Schedule C audit depend on the outcome of the audit. If the IRS determines that you underreported income or overstated deductions, you may be required to pay additional taxes, penalties, and interest. In some cases, the IRS may also pursue criminal charges for tax fraud or evasion.