My client paid somene $1500 as a subcontractor. I asked her to get the subs SS # so I could do a 1099 form. Now my client says she does not want to claim this deduction. This says to me that the sub did not report the income. Not claining this expense costs my client income and SS tax. I will try to convince her to take the deduction without filing a 1099 form. If she insists on not taking it, is it ok to prepare the return without the deduction? I know if EIC were involved or any other item that not claiming the deduction would decrease the tax or increase the refund this would not be ok to do.
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Contract Labor
It's probably okay.
I agree that when the taxpayer appears to be omitting expenses from Sch. C in order to increase EIC, that this raises some rather serious questions.
But in general, I don't think the tax law obligates a taxpayer to claim every possible deductible expense.
Moreover, if the taxpayer fails to obtain the SSN or TIN of the subcontractor, the IRS might well disallow the expense in an audit.
BMKBurton M. Koss
koss@usakoss.net
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The map is not the territory...
and the instruction book is not the process. -
Disqualify
It's not too hard to disqualify a potential deduction. If it was personal or partly personal, for instance. Or, not yet paid (check bounced).Comment
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