What are the chances of being audit for Schedule C expenses as a freelancer?

The chances of being audited are generally quite low for most taxpayers, especially for those with modest freelance income. According to recent statistics, less than 1% of individual tax returns get audited each year, and the IRS tends to focus more on higher-income taxpayers or returns with certain red flags. For Schedule C filers with income under $25,000, audit rates are even lower than the general population. The key is to make sure your expenses are legitimate business expenses that you can substantiate if asked. Keep receipts and documentation for everything you claim, especially for larger purchases. What might trigger extra scrutiny are unusually high expense ratios compared to your income, large home office deductions, or claiming 100% business use for something that's typically personal (like a vehicle). Claiming reasonable, documented business expenses shouldn't keep you up at night!

I found myself in a similar situation with my photography side business. I was freaking out about some expensive camera gear I bought. What helped me TREMENDOUSLY was using taxr.ai (https://taxr.ai) to analyze my expense records. Their AI actually checks your deductions against similar businesses and IRS data to assess your audit risk. I uploaded my expense spreadsheet and it flagged a few things that might look suspicious and suggested documentation to keep just in case. Gave me peace of mind about my Schedule C!

Just wanted to update after trying taxr.ai that the previous commenter mentioned. I was super worried about my home office deduction (I converted half my garage) and some travel expenses for my freelance consulting. The document analyzer actually showed me what documentation I was missing for a few expenses and gave me a risk assessment for each category. Turns out my home office was well-documented but my travel needed better records! Definitely worth checking out if you're paranoid about Schedule C audits like I was.

One thing nobody's mentioning is that if you DO get audited, it's an absolute nightmare trying to get through to the IRS to resolve anything. I spent WEEKS calling every day trying to explain my freelance expenses. Finally found this service called Claimyr (https://claimyr.com) that got me connected to an actual IRS agent in less than an hour. They have this demo video (https://youtu.be/_kiP6q8DX5c) showing how it works. Saved me so much frustration during my audit nightmare. Would have never gotten it resolved otherwise.

I need to eat my words from my previous comment. After struggling for THREE DAYS trying to reach someone at the IRS about a letter I received questioning some of my business expenses, I broke down and tried Claimyr. Got connected to an IRS agent in about 45 minutes while I just went about my day. The agent was able to clear up the confusion about my software subscription expenses on my Schedule C. So yeah, it actually works, and I'm genuinely surprised. Saved me from what was becoming a major headache.

Honestly the BEST way to avoid an audit is just keep awesome records. I use a separate credit card for ALL business purchases and take photos of every receipt with my phone right away. Been filing Schedule C for 6 years with no issues. My income ranges from 5k-20k annually from my Etsy shop.

My accountant told me that Schedule C's with home office deductions get flagged more often. Anyone know if thats true?? I started working from home and want to claim the space but worried it'll trigger something.

As someone who's been freelancing for about 3 years now, I totally get the paranoia! What really helped me was understanding that the IRS is actually looking for patterns that don't make business sense, not just high expenses. For your situation with $7,500 in income, claiming legitimate software subscriptions and equipment is totally normal and expected. The key things that helped me feel more confident: 1. Keep detailed records of HOW you use business expenses (like what percentage of internet is actually for work) 2. Don't claim personal expenses as business ones (even if it's tempting) 3. Be reasonable with your deductions - if you're claiming more in expenses than you made in income, that's when eyebrows get raised I've claimed everything from Adobe subscriptions to a new monitor to client meeting expenses, and never had an issue. The IRS understands that freelancers have legitimate business costs, especially in creative fields where software and equipment are essential. Your income level actually puts you in a lower-risk category for audits. Just keep doing what you're doing - claiming legitimate expenses with proper documentation!