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Tax Question - Sch C

April 15, 2014 02:47AM
Hello everyone,

Do schedule C losses apply toward the "whole" of a tax return?

If I lose $300 (earn $400 but have $700 in mileage), it seems the tax software "notices" that and temporarily reduces my return (I always owe anyway) but the when I actually submit to file, it returns back to the original amount (prior to even entering a sch C)

So, for those of us who shop part-time and have a W2 from a day job, does shopping ever affect your total tax bill positively?


Thank you,
Eric
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April 15, 2014 03:01AM
Line 12 on your 1040 should reflect the loss. But beware, your 'business' needs to make a profit three of the past five years. If you are not showing a profit your activity can be deemed a 'hobby' rather than a 'business' and you would lose the ability to deduct mileage and other expenses. Most small businesses do not make a profit their first year, but if you have been at this more than a year you probably should be showing some profit so you don't lose your deductions.
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April 15, 2014 01:36PM
Eric, if you have a loss on Schedule C it should reduce your total taxable income, which would reduce the taxes owed for the year.

Mary Davis Nowell. Based close to Fort Worth. Shopping Interstate 20 east and west, Interstate 35 north and south.
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April 15, 2014 02:06PM
There is a glitch in some of the tax prep software that has been reported previously by another poster. He/she ran both Turbo Tax and another program and compared results. Only TurbiTax correctly adjusted the toal taxes to reflect the Schedule C loss. I do not remember the name of the other program, but it was not TaxCut.

Of course, if you have too many years with Schedule C losses, IRS may disallow your "business" intentions and require an amended return with no Schedule C for your "hobby." I think that that is one of the automated things IRS does/can do without triggering an audit, so don't push your luck on it, as Flash explained above.

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.
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April 15, 2014 02:26PM
I paid a CPA to prepare my taxes for me this year. I work a FT job and MS as a PT job. I have received a refund in 2012 and 2013. Last year, H&R Block would not accept my mileage because of my FT job but I went to an actual CPA this year and they accepted my itemized mileage. They complimented me on recording my starting odometer reading on January 1, 2013 and the last odometer reading on December 30, 2013. (I did not work on the 31st.) He said that I would be surprised at how many independent contractors/self-employed people do not record this information.

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April 21, 2014 03:31AM
Thanks for all the replies.

I've been a very part timer lately. I earned $260 in fees but had 600 miles logged. Most of the shops I've done for 2013 are reimbursement only shops.

I used Turbotax software this year.

I prepared my taxes prior to the Schedule C and adding the Schedule C didn't change how much I owe.

I'm not sure how to "show a profit" if I do mostly reimbursement shops, unless I'm doing something wrong. Should I not add the mileage from those shops?
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April 21, 2014 02:26PM
I'm not fond of picking and choosing what or how much to claim as a deduction for my business, though IRS generally does not require that you take all deductions, only that you declare all income. On a regular and routine basis I monitor that I am doing enough fees in additiona to reimbursement only shops to have a profit.
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April 26, 2014 01:25PM
Flash,

Thanks for the insight. I think I will monitor the same just to be sure.
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