I had the IRS change my 2016 1040 (MINE - not a client's) for the state tax that I deduct from my schedule C, but they didn't change that part. I add a line to my Schedule A to add it back to income so that my Schedule A reflects only that which is personal. The IRS took that line off of my Schedule A and then added a Miscellaneous Income line to my 1040 for that amount. There is no net change to my federal return, but my state hit me with a bill. Even though I add that back into my state income since state tax isn't deductible on my state return.
How is this normally entered on the return and does Proseries Basic have a way to enter it? I don't see anything on the tax payments schedule where I can adjust what is deducted on the Schedule A.
I'm concerned because I've done this for years and not just for myself - for several clients. I haven't had any of them com back yet, but it's probably only a matter of time... ???
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You can't deduct state income taxes from a schedule C. I'm not sure exactly what happened with your return, but you really want to stop taking that deduction.
State income tax paid is a Sch A deduction then the following year any state refund becomes income on that years return.....you need to get Sch C out of the mix.
What kind of state tax are you deducting on Sch C? Im confused.
State income tax
You can't deduct state income taxes from a schedule C. I'm not sure exactly what happened with your return, but you really want to stop taking that deduction.
State income tax paid is a Sch A deduction then the following year any state refund becomes income on that years return.....you need to get Sch C out of the mix.
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