The Bradford Tax Institute conducted a polling question during a continuing education webinar for CPAs and enrolled agents (EAs) last October.  The attendees had to answer it in order to prove attendance.

The question was “Do this: Think of yourself and how many clients you have who have claimed the home-office deduction for each of the last three years.  Now with that number of clients in mind, what percentage have been audited by the IRS in the last three years?”

• No audits at all – 73 percent
• Fewer than 5 percent audited – 22 percent
• Five to 10 percent – 5 percent

Conclusion: There is no premise that declaring a home-office tax deduction triggers a red flag with the IRS.  In fact, the numbers show just the opposite. And, since the IRS hasn’t published its list of “flag” colors – for audits or otherwise, it seems they remain a secret.