By ANDREA COOMBES

An unexpected letter from the Internal Revenue Service can make your stomach drop, but you can take steps to reduce your audit risk.

Taxpayers overall face a low audit risk: The IRS audited 1.1% of all individual tax returns filed in 2010, or 1.6 million returns of 141 million filed.

The vast majority of those audits—1.2 million—were done by mail. Just 392,000 involved an in-person meeting with the IRS. That’s not necessarily good news. Taxpayers often are confused by IRS correspondence, and with such audits they don’t have the benefit of working with one single agent, the National Taxpayer Advocate says.

But the risk of an audit skyrockets for some. Fully 12.5% of taxpayers whose income topped $1 million faced an audit. And self-employed people who filed a Schedule C with gross receipts of $100,000 or more faced an audit rate of about 4%—four times higher than average taxpayers. Here are seven red flags:

Schedule C

Sole proprietors filing a Schedule C can reduce their audit risk by sticking to the facts—or at least making sure their expenses and income are not dramatically different from similar businesses.

For example, one Chicago-based hot-dog-stand owner said his cost of goods sold was 50% of gross receipts, says Robert McKenzie, a partner in the law firm Arnstein & Lehr. “I know Chicago hot dogs are great, but he had a high cost.”

The IRS found the hot-dog salesman was reporting his expenses but only part of his revenue. He faced “a lot of tax and penalty,” Mr. McKenzie says.

Check out BizStats.com for an idea of whether your numbers are out of line; Mr. McKenzie says the IRS tells its agents to review that site for average business costs.

Over-the-Top Deductions

Taxpayers who claim large deductions attract attention. “Anything that is significantly above what persons in your income bracket might deduct is likely to be looked at,” says Mr. McKenzie.

“The mantra I preach to my clients is keep good records,” says Audrey L. Griffin, an enrolled agent in Centerville, Ga. “You’re going to get the best possible, honest, legal result and you have nothing to fear.”

Business or Hobby?

The IRS may decide your business is a hobby—especially if you have other income sources. For example, Mr. McKenzie says, the IRS disagreed with an executive who, in addition to his annual salary of $500,000, deducted expenses for his yacht, claiming it was a business charter operation.

In another case, a young man with annual trust-fund income of $300,000 decided to become a race-car driver. He wrote off his costs, including the car, maintenance and the like.

In both cases, the taxpayers settled with the IRS for a partial write-off, Mr. McKenzie says.

Rental Losses

If you show income from your job or business and claim rental-property losses, be wary. IRS rules limit deducting those losses in the current year, unless you prove you’re actively involved in managing the property.

“It’s a real hot item right now: Audit people who make significant income from their jobs and also claim rental losses,” Mr. McKenzie says.

In one case, the wife of a real-estate attorney—a stay-at-home mom with three young kids—managed the family’s rental properties, but the IRS said the couple couldn’t deduct rental losses in the current year. On appeal they won their case, Mr. McKenzie says.

“We were able to prove yes, he couldn’t have devoted 50% of his time [to the rentals] and made $600,000 a year, but she could,” he says.

Business Use of a Car

Ms. Griffin’s clients often insist that 100% of their driving is related to business and thus their costs are 100% deductible, but when she digs deeper she finds they often use that same car for non-business purposes.

“Then it’s not 100%, which is the reason the IRS requires you to keep mileage records,” she says.

Home-Office Deduction

You may be able to claim a deduction for expenses related to your home office, including home-insurance and utilities costs, but be prepared for the IRS’s attention.

“I would not discourage a client from taking that deduction if they qualify. I just try very hard to make sure they know the requirements and keep good records,” Ms. Griffin says.

But is it worth it? You would claim a deduction for a percentage of the housing expense related to the square feet of office space divided by the home’s total square footage. “It may be a very small percentage and it may not be worth raising this red flag,” Ms. Griffin says.

Earned-Income Tax Credit

Among people who claimed the EITC—a refundable credit worth up to $5,751 in 2011 for moderate-income taxpayers—2.2% of returns filed in 2010 were audited.

There’s a “high level of noncompliance,” Mr. McKenzie says, often because fraudsters exploit this benefit to line their own pockets. For instance, scammers will provide an extra Social Security number so taxpayers can claim an extra dependent—and increase their credit.

It’s a valid tax credit—just mind the scams and stick to the truth.

Write to Andrea Coombes at andrea.coombes@dowjones.com

—Andrea Coombes is a personal finance editor for MarketWatch. Read more at marketwatch.com.

Por ALAN MURRAY

Quando Dan Akerson assumiu o comando da reestruturação da General Motors Co., pouquíssima gente poderia prever o impacto quase imediato que ele teria numa frente bem específica: dar à mulher papéis de maior destaque na montadora.

O The Wall Street Journal conversou com o presidente da GM sobre a contribuição de executivas, diretoras e engenheiras na reinvenção da montadora americana.

Confira a seguir trechos editados da conversa.

Alan Murray: A indústria automobilística é, provavelmente, uma das mais dominadas pelo sexo masculino. Por que essa campanha para promover e atrair mais mulheres?

Dan Akerson: Não sei se foi um esforço consciente ou apenas um reconhecimento do talento. Toda pessoa é meio prisioneira de seu passado. Lá em casa, minha mãe era uma forte presença. Teve mais influência sobre mim do que meu pai, que eu tanto amava. Minha mãe era ambiciosa, talentosa, corria riscos. Quando eu tinha 11 anos, foi trabalhar de caixa numa loja. Chegou a gerente-adjunta. Se não fosse mulher — e não digo isso de forma pejorativa — teria sido a gerente. O próprio gerente dizia isso.

Para mim, portanto, a questão não é o sexo, mas a capacidade. Quatro dos 12 membros do conselho da GM são mulheres. A Mary Barra [vice-presidente mundial de desenvolvimento de produtos] é uma das executivas de maior talento que conheço. Dirigia o departamento de recursos humanos, mas tinha passado pelas áreas de produção e engenharia. Dirigiu fábricas. Numa empresa tradicional como a GM, o diretor de RH é visto como a pessoa por trás do trono, sussurrando no ouvido do rei (…). Não gostava disso. Agora, ela chefia o desenvolvimento de produtos no mundo todo.

Murray: Deve ser a primeira mulher a ocupar um posto como este, certo? O trabalho exala testosterona.

Akerson: É verdade, há muito disso na indústria automobilística. Diria que a Mary é igualmente boa para lidar com a burocracia quanto para distinguir o que é importante do que não é. E tem uma capacidade tremenda de trabalhar com os outros.

Murray: O sr. foi criticado devido a essa nomeação.

Akerson: Pois é. Para ser sincero, fiquei surpreso. Disseram que era porque eu não era do setor. Hoje, no entanto, estou para dizer que ser do setor não é a melhor coisa, pois foram caras do setor que deixaram a indústria à beira do colapso.

Se você parar para pensar, a lista de mulheres [em cargos importantes] na GM hoje inclui a diretora da Chevrolet na Europa; a do nosso terceiro maior mercado, o Brasil; a diretora mundial de manufatura; a diretora de RH. Eu não queria as mulheres ocupando só os cargos tradicionalmente reservados a elas.

Murray: Cargos sem ligação com operações.

Akerson: Isso. Algumas de nossas maiores fábricas são dirigidas por mulheres; 20% do pessoal técnico é do sexo feminino. Buscamos líderes com formação em engenharia, pois essa é uma empresa complexa e de base técnica.

Murray: O sr. disse que [o WJS] devia ter citado a Mary Barra na reportagem recente sobre mulheres que um dia poderão chegar à liderança de grandes empresas. O próximo diretor-presidente da GM vai ser ela?

Akerson: Não sei. É uma candidata. Não me surpreenderia se fosse. Creio que há uma série de candidatos qualificados.

Murray: Há quatro mulheres entre os 12 membros do conselho de administração da GM. Isso afeta a cultura para a mulher na organização?

Akerson: Sim. Sempre é bom ver alguém igual a você crescendo, com possibilidade real de chegar ao topo. E isso vale para o sexo, a raça, a etnia.

Murray: O sr. chegou na empresa há três anos, logo após a saída da GM do processo de recuperação judicial. Com tudo o que a montadora tinha para se preocupar naquele momento, como e por que fazer disso uma prioridade?

Akerson: Não diria que fiz disso uma prioridade. Era uma segunda prioridade. A maior de todas era colocar a empresa em ordem. A GM teve de nascer de novo. E agora estamos buscando transformar uma empresa boa numa empresa excelente.

Most medicine cabinets contain a jumble of over-the-counter health products, but knowing what to use, when, can be confusing. Just because a medication is sold without a prescription doesn’t mean it is harmless, and some old standbys can do more harm than good.Based on consultations with experts and reference materials, here is a deceptively easy quiz to test your home-remedy literacy.

1. You have a headache. Should you take:

A) Advil (ibuprofen)

B) Tylenol (acetaminophen)

C) Aspirin

Answer: A, B or C

All of them will relieve a simple headache, but through different means and with different side effects.

Advil and Motrin (ibuprofen), Aleve (naproxen sodium) and aspirin all reduce pain by fighting inflammation, which also makes them particularly useful for combating arthritis, tooth pain, menstrual cramps and muscle sprains. But they can cause stomach bleeding, so people with peptic ulcers, liver, kidney or heart disease should talk to their doctors before taking them. Aspirin has the added benefit of preventing blood clots, which is why taking one daily can lower the risk of cardiovascular disease. But aspirin shouldn’t be used by people who have low blood pressure or open wounds, or by children who have the flu or chickenpox due to the risk of Reye’s syndrome, a rare neurological disorder.

Advil or Tylenol for a headache? Antihistamine or decongestant for a terrible cold? Heating pad or ice pack for a sore back? Melinda Beck on Lunch Break has a test of your medicine-chest literacy for treating common ailments. Photo: Mike Right.

Tylenol (acetaminophen) works by calming pain signals in the brain. But it can cause liver damage if you regularly have three or more alcoholic drinks a day or take a higher dosage than recommended.

All in all, ibuprofen is arguably the strongest, but aspirin works faster, naproxen lasts longer and acetaminophen is safer if you have stomach problems (and aren’t a heavy drinker). A few brands contain both acetaminophen and aspirin, but don’t mix them on your own and don’t take any of them for more than five days straight, since they can cause “rebound” headaches, in which the body feels withdrawal when they wear off.

2. To clean a cut or scrape, it is best to use:

A) Hydrogen peroxide

B) Isopropyl (rubbing) alcohol

C) Neither

D) Both

Answer: C

Cleaning a wound with peroxide or alcohol can harm the tissue and delay healing. Instead, rinsing under cool water for several minutes can usually remove most dirt, debris or bacteria. Use mild soap on the area around the wound if it’s still dirty. Antibiotic ointments aren’t necessary for minor wounds and can sometimes cause allergic skin reactions. Minor bleeding helps clean a wound, but see a doctor if the bleeding doesn’t stop soon, if red streaks appear, if the wound is deep enough to see fat or muscle, if it came from an animal or human bite or if it is a puncture wound and you haven’t had a tetanus shot in five years.

3. For a sore back or sprained ankle, which options make sense?

A) Heat

B) Ice

C) Heat rub

D) Prescription pain pills from your last backache

Answer: A, B and C

Both heat and ice can help with this type of pain. Heat relaxes the nerves that fire pain signals to the brain, while cold numbs them. And both bring more blood circulation to the site. Some experts recommend ice first, on and off for 20 minutes at a time, for 48 hours after an injury; others suggest alternating heat and ice, with 20 minutes of each.

Heat rubs come in a variety of creams, sprays and adhesive patches for pain relief. They bind to receptors in the skin to create a sensation of heat or cold, distracting users from feeling pain. The warmth they create may also help tense muscles relax. Some use menthol or camphor, others use cayenne or capsaicin, a derivative of hot peppers or methyl salicylate. Heat rubs are generally considered safe but shouldn’t be used along with heating pads or more than three times a day.

While many people don’t finish prescriptions for Percocet, Vicodin or generic equivalents prescribed after surgery or dental work, it is a bad idea to take them for something else. Leftover painkillers are an invitation to abuse—by yourself, by your children or by nosy visitors. Studies show that 68% of prescription drug-abusers obtain them from home or from friends.

4. Which is better, coated or non-coated aspirin?

A) Coated

B) Non-coated

C) Neither

Answer: Trick question—it depends

Coated aspirin is fine for pain and fever relief and for daily regimens to lower cardiovascular risks. Manufacturers started coating aspirin so it wouldn’t taste nasty, cause burning in the throat and upset your stomach (although that is still a risk). Aspirin with “enteric” coating is even designed to dissolve in the colon, not the stomach, but that can reduce its effectiveness by as much as 30%.

During a possible heart attack, chew an uncoated aspirin so it will get it into your bloodstream faster.

5. For sneezing, sniffling and a sore throat, the best remedy is:

A) An antihistamine

B) A decongestant

C) A leftover antibiotic

Answer: A or B, depending on the cause

Many such symptoms can be due to either a cold virus or an allergy and it can be hard to tell the difference. (Some clues: Allergies don’t cause fevers or body aches, and nasal secretions are usually clear.)

Allergies respond better to antihistamines (found in Benadryl and other products), which prevent the body from releasing histamines, natural chemicals that cause inflammation in mucous membranes. While there’s no cure for a cold, decongestants such as Sudafed, Afrin and others can help sufferers breathe better by constricting small blood vessels and reducing swelling in nasal passages.

Antihistamines make many people drowsy, while decongestants tend to keep people awake, which is why some brands combine them or use them in night-time and day-time formulas. Neither should be taken by people with glaucoma, high blood pressure, enlarged prostates or certain heart conditions.

As for antibiotics, experts warn that they are ineffective against colds. In fact, people shouldn’t have leftovers. Take the entire course when fighting an infection, so bacteria don’t become resistant.

6. Your stomach is upset, so you should take:

A) An antacid

B) A gas reliever

C) Something for constipation

D) Syrup of ipecac

Answer: A, B or C

Here, too, zeroing in on your symptoms can help determine what to take.

A burning sensation in the stomach is likely due to excess acid, especially after a big or spicy meal. When stomach acid splashes up into the esophagus, it causes heartburn (also known as acid reflux). Antacids such as Tums, Rolaids, Maalox and Mylanta can neutralize some acid in the stomach. H2 blockers (Pepcid, Tagamet, Zantac) decrease acid production, as do proton pump inhibitors (Prilosec, Prevacid, Nexium). But PPIs also raise the risk of bone fractures and immune problems, so they are recommended only for people who have acid reflux regularly.

Pepto-Bismol (bismuth subsalicylate) is technically an antidiarrheal agent that reduces the flow of fluids and reduces inflammation in the intestines and may kill diarrhea-causing organisms there. That can ease heartburn and stomach upset in some cases, but it shouldn’t be taken along with aspirin or blood-thinners.

Gas causes some of the worst stomach pain and often doesn’t respond to antacids. Products like Gas-X that contain simethicone break the surface tension of gas bubbles, helping it pass. Cancer, gallstones and ulcers can also cause stomach upset, so if you have frequent indigestion, consult your doctor.

Syrup of ipecac was never recommended for stomach upsets. For decades, parents were urged to keep it on hand to induce vomiting in case a child swallowed a poison or pills. Then studies showed that vomiting some poisons could cause additional damage. Also, ipecac was being abused by people with eating disorders. Now, the American Academy of Pediatrics recommends against keeping it, and most pharmacies no longer sell it.

Write to Melinda Beck at HealthJournal@wsj.com