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Posted by Harlan Lunsford on June 24, 2008, 3:05 pm
Please log in for more thread options Arthur Kamlet wrote:
>> I just received a letter from the IRS for my 2006 taxes, which I
>> failed to report my 1099-MISC. The 1099-MISC reports that I received
>> 2620. This money was received for consulting services for computer
>> support.
>>
>> Now the IRS correctly reports that I owe them 800 that includes
>> interest, and without any penalties yet. Of course paying 15.3
>> percent or 370 for taxes, but can't I amend my '06 form and include
>> the business expenses, which I never claimed I owned a business.
>>
>> So if I report $3000 in expenses can I include all of these in my
>> deductions to nullify my increase in income?
>
>
> On the one hand, yes you can amend your tax return by fuiling a corrected
> Schedule C showing all income and expenses for this work.
>
>
> Rather than fill out a form 1040X, just attach the new Schedule C
> to the paperwork the IRS sent you and return to the address
> indicated on their notice.
>
>
> On the other hand, be aware than large expenses may be further
> examined, so be sure to have in your possession receipts and other
> proof of those expenses. At this point in time, if you have no proof
> to show te iRS, should they ask, I would be very hesitant about
> including them on your tax return.
>
>
> Finally, or on the other other hand (?) be aware that if you have
> so many expenses that you showed a loss, the IRS might wish to
> challenge whether this is a business or a hobby.
>
>
> If a hobby, you do not file schedule C, and your expenses, which cannot
> exceed income, are shown as miscellaneous schedule A deductions subject
> to reduction by 2% of AGI.
>
>
> Ordinarilly, you get a free ride on the question of profit vs hobby
> for two years or so, but once the IRS starts questioning expenses,
> you still have to prove all expenses.
--
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