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Jon Andrews
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience:  I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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Schedule C mistake

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I accidently overstated auto expenses by 1,100.00 on Schedule C for 2002. May I correct this on the 2003 Schedule C by reducing the same amounts rather than go thru filing an amended return and put the IRS thru all the work for a small amount like this? The only fica involved is my own.
Thanks
Sorry - each year must stand on its own. The only acceptable method of correction is to file an amended return.
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You cannot adjust 2003 with 2002 figures.

The ONLY resolution is an amended 2002 return, Federal and CA.

IF you adjust 2003 to reflect the difference and are later audited for 2002, they would not accept the 2003 adjustment, because the expenses do not belong in 2003. They would:

1. Assess penalties and interest for underpayment in 2002.

2. Assess penalties and interest for underpayment in 2003. (And they would know about the 2003 adjustment, in the course of a 2002 audit, because you would have told them so - to explain how you "paid your rightful tax on the money.")

You lose both ways!
Customer: replied 12 years ago.
I am not getting your answer
Whose answer?

Are you not seeing the answers on the screen or do you not understand the answer?
I think SunTaxMan misunderstood and thought you were trying to deduct expenses in 2003 instead of 2002. If I understand the question correctly, you would like to REDUCE 2003 expenses in order to make up for an overstatement in 2002.

I understand that doing that would be simpler for you and it would probably be simpler for the IRS as well. However, that is not how they work.

The only "acceptable" way to adjust this is to amend the 2002 return.
[email protected]
Jon Andrews, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 3118
Experience: I deal with all levels of tax planning and controversy - from the ordinary to the complex.
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