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Schedle C full year during covid?

BeckerMgt
Level 2

What is everyone doing about their self-employed clients who couldn't work due to quarantine? If someone who sees clients in their home only had income from January to March last year do they still get the full year of home office, heath insurance and other deductions since they were technically still in business but were forced to not see clients? Does it make a difference if they began collecting unemployment in April? Does that mean that they were officially not doing business? Obviously someone with a storefront would still be deducting all of their expenses for the entire year.   

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Terry53029
Level 11
Level 11

See the instructions for form 7202 at this link:

https://www.irs.gov/pub/irs-pdf/i7202.pdf

TaxGuyBill
Level 14

@BeckerMgt wrote:

What is everyone doing about their self-employed clients who couldn't work due to quarantine? If someone who sees clients in their home only had income from January to March last year do they still get the full year of home office, heath insurance and other deductions since they were technically still in business but were forced to not see clients?


Quarantine did not last 9 months, and I'm not aware of anywhere that 'forced' 9 months of not doing business.  At first glance, it sounds like your client CHOSE not to continue their business after March, in which case no, those expenses would not be deductible for the rest of the year.

If you think that does not apply, then you need to explain why the client did not work for all of that time.

BobKamman
Level 14

@TaxGuyBill "Quarantine did not last 9 months"

Mandated business closures did not last 9 months, at least in most places.  But doctors and scientists did not advise the public to resume close contact with anyone outside the household.  Unemployment was still available to people who were trying to find work -- in fact, that's one of the requirements of state programs -- or were earning less than specific amounts.  The goal posts kept being moved.  In April, many people thought it would be over by May or June; in September, many expected it to end by Thanksgiving, or at least well before Christmas.  

Expenses continued.  Self-employed did not abandon their business.  You have to look at the facts and circumstances of each case, but try to avoid the compulsion to play the role of IRS auditor.  

BeckerMgt
Level 2

Yes, when I said "forced not to see clients" I meant both by the government mandated quarantine but also just by it being not safe to have large groups of clients coming into your home office all year. You want to work but it's just not safe and as a business you still have expenses all year.    

qbteachmt
Level 15

"I meant both by the government mandated quarantine"

Are you sure you don't mean "stay at home order" and not "quarantine?"

"Isolation and quarantine help protect the public by preventing exposure to people who have or may have a contagious disease.

  • Isolation separates sick people with a contagious disease from people who are not sick.
  • Quarantine separates and restricts the movement of people who were exposed to a contagious disease to see if they become sick."

Reducing contacts and setting up remote sessions is not quarantine. Quarantine is when you personally are told to wait out a period of exposure to see if you develop an illness. Isolation is when you are ill and don't want to be a public spreader.

"but also just by it being not safe to have large groups of clients coming into your home office all year."

That isn't quarantine or isolation. Restrictions are not the same thing as being ill, either.

"You want to work but it's just not safe"

That would be why a self-employed or "gig worker" got PUA funds, not UI funds. UI is from an employer relationship.

What you have is business people with reduced income. Or, you have someone who closed their business. Or, you have someone directly and personally impacted, which is why there is the sick days and family medical leave provisions. For instance, child care was closed and schools were closed, and home schooling was required, so many adults did not go to the office. That is neither quarantine nor isolation.

You have to evaluate each tax payer's status.

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Just-Lisa-Now-
Level 15
Level 15
cant have sick pay and unemployment for the same time period.

♪♫•*¨*•.¸¸♥Lisa♥¸¸.•*¨*•♫♪