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  1. #1
    Join Date
    Jan 2009
    Posts
    11

    Default Should I File a Schedule C

    I owe $350 on my federal income taxes, however, I could file a Schedule C and claim a loss. Good idea, or not? Ya see, my side gig is Acting. And I spend some money on acting, and make a little, but pocket change. My concern is, if I file a Schedule C, and take a loss, will that automatically trigger an audit? I do have receipts, and could have a loss of about $500, so instead of me owing $350, they'd owe me $150. Again, would that trigger an audit? Should I just pay the $350? I've never been audited. Please help.

  2. #2
    Join Date
    Jan 2008
    Location
    Toledo, OH
    Posts
    16,307

    Default Re: Should I File a Schedule C

    If you can back up your losses with receipts, file the Schedule C.

    I've been mostly self-employed for years, file a Schedule C every year, and have yet to be audited. Filing a Schedule C does not automatically trigger an audit.

    (Even if it did, if you can back up your claims with receipts, that would be that.)

  3. #3
    Join Date
    Jan 2009
    Posts
    11

    Default Re: Should I File a Schedule C

    I've finished Schedule C, and my income from Acting was $325, and my expenses were $1930.72.

    I could reduce the expenses but I do have receipts and would like to file. If I report it this way, do you think they'll flag it or question it? Or is that hard to tell?

  4. #4
    Join Date
    Jan 2008
    Location
    Toledo, OH
    Posts
    16,307

    Default Re: Should I File a Schedule C

    You're overthinking it.

    Myself, I'd file the Schedule C. That's a lot of loss for a teeny smidge of income, and you've got the receipts to prove it.

    What's the worst that can happen? They audit you? So? An audit doesn't mean you're in trouble, it just means the IRS has some questions.

    You handle an audit by handing over your receipts for the auditor to look at, cluck over, match up with your return, and give back to you. If you're that worried about an audit, take your taxes to H&R Block, who guarantee that if they prepare your taxes and you're audited, they will appear with you at the audit and do all the talking. $100 is nothing if it helps you stop fretting over this.

  5. #5
    Join Date
    Jun 2009
    Location
    California
    Posts
    666

    Default Re: Should I File a Schedule C

    Quote Quoting Luckyword
    View Post
    I've finished Schedule C, and my income from Acting was $325, and my expenses were $1930.72.

    I could reduce the expenses but I do have receipts and would like to file. If I report it this way, do you think they'll flag it or question it? Or is that hard to tell?
    What you need to be able to prove, if challenged by the IRS, is that this was/is a legitimate business (not a hobby) and that the expenses are, in fact, business expenses, not just costs that you happened to incur.

    For example, you could easily have a receipt from purchasing coffee for a couple of friends at a coffee shop. If you consider this a business expense, you would have to be able to present a convincing argument on how this meeting related to your acting business.

    I don't share Missy's confidence in a high volume commercial tax preparer. I've found the people that they have work on low to moderate income returns to be someone unimpressive.

  6. #6
    Join Date
    Jul 2007
    Location
    Florida
    Posts
    2,344

    Default Re: Should I File a Schedule C

    Can you demonstrate to the satisfaction of the IRS that your purpose for engaging in acting is to make money? Do you do it with regularity and consistency? Do you alter your practices in order to stop your loses and try to make profits? If you do those things, it is a business. If you act whether or not you make money because you just enjoy doing it, then it is not a business but rather a hobby. Lot's of people generate a little revenue in their hobbies to offset their costs. Some generate a lot, but it's still a hobby. Now, if you make money for three out of five years then the presumption is that you're doing it to make money even if it is indeed a hobby. But you're talking losses. There's no way to predict precisely how an auditor would view your specific activity.

    As far as the retail high-volume tax businesses, some of them employ enrolled agents who are highly proficient in taxes and also marginally competent folks. Sadly, so do CPA firms.

  7. #7
    Join Date
    Aug 2009
    Posts
    2

    Default Re: Should I File a Schedule C

    While everyone is correct that you must be able to justify the deductions being taken, they are missing one very large, important item regarding filing the schedule C.

    Are you an employee or a contractor? Look through the requirements of the IRS to determine if you are a contractor or an employee. If you fall under the identity of an employee, your deductions are limited to being itemized on Schedule A, and then only those that are greater than 2% of your income. Verify through your check stub(s) that the company is treating you as a contractor (no taxes at all taken out, including FICA and Soc Sec.), otherwise you could be triggering questions from the IRS.

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