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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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I have a question now - after reading this, it appears that

Resolved Question:

I have a question now - after reading this, it appears that I made a mistake in my filing last year and filed a Schedule C for my husband's expenses (100% commissioned salesman whose office is at home - but his company does take Federal and State taxes.) What do I do or how much trouble could I be in??
Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.

Hello Leo,


You are not in any trouble here as long as you get the filing corrected. You would need to file an amended return for 2008 to correct the error. An amended return is filed using Form 1040X.


You will just need to resubmit your tax forms showing your husband received wages rather than income from self employment. If he has business expenses which were not reimbursed by his employer, you can still claim those expenses by also filing Form 2106 with your return. Once you get the forms filled out properly you will use Form 1040X to recap the changes between the return that was originally filed and the amended return.


If it ends up that you owe some additional taxes due to the changes you made, then you will also owe some interest and penalties for the late payment. Once the IRS receives and processes your amended return, they will calculate the amount of any interest and penalties which are due and will send you a notice of what those amounts are.



Thank you Leo



Customer: replied 7 years ago.
Thank you Marlo - I'm sorry but I still have a question. I didn't file his income on the Schedule C - I did that on the 1040, but filed his expenses under the schedule c. Does that change anything?
Expert:  Merlo replied 7 years ago.

Hello again Leo,


No, it will not really change the fact that you need to file an amended return. The only real difference here is going to be the form you use to claim his employee expenses, and the amount which you can claim.


You should have used Form 2106 to report his unreimbursed employee expenses. Those expenses then transfer over to your Schedule A and become part of your itemized deductions. The only real difference is going to be that expenses in this category on Schedule A are limited to those which exceed 2-1/2% of your total adjusted gross income. So as an example, if your total AGI for the year was $50,000, two percent of that amount is $1,000. That means that the first $1,000 in employee expenses could not be claimed, but the rest can be.


The only other issue you will have here is if you did not itemize your deductions on that return. You must itemize your deductions in order to deduct employee expenses.



Thank you Leo



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