Income Reporting and Schedule C Issues
Income Reporting and Schedule C Issues
Taxpayers filing a Schedule C must report the correct gross income and all related deductions on their return. Determining the correct income and deductions creates an issue for preparers who need to verify the income reported and expenses claimed, whether this is a result of poor record keeping or a direct attempt to falsify figures to optimize credits.
The common income-reporting issues are:
• Questionable Schedule C income to qualify for EITC (i.e., taxpayers with no 1099)
- Questionable Schedule C losses that reduce other income and qualify taxpayers for EITC
- Schedule C income, but the taxpayers have no records for income or expenses
- Income from Schedule C businesses, but no expenses when it is reasonable to expect the taxpayer incurred expenses
Schedule C Recommendations
REPORT ONLY INFORMATION THAT IS VALID AND SUSTAINABLE. INCORRECT AND / OR FRAUDULENT INFORMATION ONLY INCREASES THE OPPORTUNITIES FOR AN AUDIT.
AND REMEMBER: SI ME DICEN TAXES – YO DIGO CORDERO.
