7 “Harmless” Tax Deductions That Flag Your Return for Audit

February 1, 2026

You might think your tax return is airtight. After all, you’re just claiming what’s rightfully yours. But some of the most common tax deductions, even the ones that seem perfectly legitimate, can quietly raise red flags with the IRS. These aren’t shady loopholes or aggressive write-offs; they’re everyday deductions that, when misused or misunderstood, can trigger an audit. With the IRS ramping up enforcement and using AI to spot anomalies, it’s more important than ever to file smart. Here’s a look at seven “harmless” tax deductions that could put your return under the microscope.

1. The Home Office Deduction

With remote work now the norm, more taxpayers are claiming the home office deduction. But the IRS has strict rules: your workspace must be used exclusively and regularly for business. If your “office” doubles as a guest bedroom or your kitchen table, you may be on shaky ground. The deduction is especially risky for W-2 employees who aren’t self-employed, as they generally don’t qualify. If you’re claiming it, be ready to prove your space is dedicated solely to business.

2. Large Charitable Contributions

Giving to charity is commendable, but claiming too much can raise eyebrows. The IRS compares your charitable deductions to your income, and if they seem disproportionately high, it could trigger a closer look. For example, donating $15,000 on a $60,000 salary might seem suspicious without proper documentation. Always keep receipts, acknowledgment letters, and appraisals for non-cash donations. And remember, your time spent volunteering isn’t deductible; only actual expenses are.

3. Business Meals and Entertainment

Yes, you can still deduct 50% of business meals, but the rules are tighter than ever. You must prove the meal was directly related to your business and that you or an employee were present. Vague descriptions like “client lunch” won’t cut it anymore. The IRS wants to see who attended, what was discussed, and how it ties to your business. If you’re self-employed and claiming frequent meals, be prepared to back it up with detailed records.

4. Vehicle Expenses for Business Use

Using your car for business purposes is a legitimate deduction, but it’s also a favorite audit trigger. Claiming 100% business use for a personal vehicle is a red flag unless you have a separate car for personal errands. The IRS expects detailed mileage logs, including dates, destinations, and the purpose of each trip. Estimating or rounding your mileage can get you into trouble. Use a mileage tracking app or keep a written log to stay compliant.

5. Hobby Losses Disguised as Business Expenses

Turning your passion into a side hustle is great, but the IRS draws a clear line between a business and a hobby. If your activity doesn’t show a profit in at least three of the last five years, it may be considered a hobby. That means you can’t deduct expenses beyond the income it generates. Claiming losses year after year without a clear business plan is a red flag. To stay safe, document your efforts to make a profit and keep thorough records.

6. Rental Property Losses

Real estate can be a smart investment, but it’s also a common audit target. If you’re claiming large losses on a rental property, the IRS may question whether it’s a business or a personal expense. Passive activity loss rules limit how much you can deduct unless you qualify as a real estate professional. That means spending at least 750 hours a year actively managing your properties. Misclassifying your role or inflating expenses can lead to disallowed deductions and penalties.

7. Rounding Every Number

It might seem tidy to round your numbers to the nearest hundred or thousand, but it can look suspicious. Real-life expenses rarely end in perfect zeros, and the IRS knows it. A return filled with rounded numbers may suggest you’re estimating rather than reporting actual figures. This can trigger a closer look, especially if paired with other red flags. Always report exact amounts from your receipts, W-2s, and 1099s to avoid unnecessary scrutiny.

Smart Deductions Start with Smart Documentation

The key to avoiding an audit isn’t skipping deductions. It’s claiming them correctly and backing them up with solid documentation. The IRS isn’t out to punish honest taxpayers, but it is on the lookout for inconsistencies and patterns that don’t add up. By understanding which deductions raise red flags, you can take proactive steps to protect yourself. Keep detailed records, avoid exaggeration, and don’t be afraid to claim what you’re entitled to, just do it by the book. A little extra diligence now can save you a lot of stress later.

Have you ever had a deduction questioned by the IRS? What did you learn from the experience? Share your story in the comments!