I'm just getting my income tax stuff together and I just have a bad feeling an audit is in my future. It is not that I've done anything shadey, but here is the situation/back-story: - I work for myself and therefore only pay myself what I need. Basically I have no set monthly income. It all depends on my monthly expenses. I pay a set amount to the government in source deductions (basically the taxes, etc. that I estimate will be due at the end of the year) each month so ideally I don't owe much more at the end of the year -- basically try to pay my taxes up front. To further lessen the tax burden, my wife and I income split (basically we take the money made and divide it in half so both of us end up in a lower tax bracket than I would individually if I made the whole amount). - We sold our house this past year, and the housing market here was insane at the time. Basically sold for almost double what we paid. Instead of taking a salary for a few months (to decrease my business expenses), we basically lived off of the proceeds from the house sale. I checked and double checked with the accountant that the government was not going to come after this money... and the tax laws here say no. It is all mine. Basically, it is one of the few tax free investments available. Long story short... on paper, my wife and I didn't make a whole lot of money this past year and it looks like I am actually in line for a big fat refund. Now me, the layman here, see a bunch of red flags and I assume the tax-man will as well. So, anyone gone through an audit before? Is it as painful as I anticipate?