Schedule C

[Gary]

I have a client that wants me to prepare his parents 2008 and 2009 return. He brought in the 2006 and 2007 return that he prepared for them on TurboTax, I have found several mistakes on the previous returns. First of all, the father died in 2009. He has a schedule C for construction remodeling. He has workers he paid with a 1099-misc. Does a schedule C with wages paid require an EIN? All he has is a SSN. If so, is there any way to correct the past returns or the 2008 and 2009 or do i just file them under his SSN?

The next problem is that his spouse also has a schedule C for a tailoring business. She actually has a storefront that she rents. Her 2006 and 2007 schedule C are listed under her husband's name and SSN. Obviously the self-employment taxes were allocated to the wrong spouse. Is it necessary to amend these previous returns if they are not worried about who got credit for the self employment taxes? If I now file the 2008 return under her name, do I have to designate it as a new business? She is already depreciating equipment.

I will have future questions on these returns as I get deeper into them. Any help or advice would be appreciated.

Gary

[taxmandan]

I have a client that wants me to prepare his parents 2008 and 2009 return. He brought in the 2006 and 2007 return that he prepared for them on TurboTax, I have found several mistakes on the previous returns. First of all, the father died in 2009. He has a schedule C for construction remodeling. He has workers he paid with a 1099-misc. Does a schedule C with wages paid require an EIN? All he has is a SSN. If so, is there any way to correct the past returns or the 2008 and 2009 or do i just file them under his SSN?

The next problem is that his spouse also has a schedule C for a tailoring business. She actually has a storefront that she rents. Her 2006 and 2007 schedule C are listed under her husband's name and SSN. Obviously the self-employment taxes were allocated to the wrong spouse. Is it necessary to amend these previous returns if they are not worried about who got credit for the self employment taxes? If I now file the 2008 return under her name, do I have to designate it as a new business? She is already depreciating equipment.

I will have future questions on these returns as I get deeper into them. Any help or advice would be appreciated.

Gary

Sounds like he paid the workers as independent contractors so he would not need to have an EIN, his SSN is sufficient. As for the tailoring biz, you could amend to reallocate the SE payment to her account, going forward I would list her as owner and not designate a new business.

[Gretel]

I have a client that wants me to prepare his parents 2008 and 2009 return. He brought in the 2006 and 2007 return that he prepared for them on TurboTax, I have found several mistakes on the previous returns. First of all, the father died in 2009. He has a schedule C for construction remodeling. He has workers he paid with a 1099-misc. Does a schedule C with wages paid require an EIN? All he has is a SSN. If so, is there any way to correct the past returns or the 2008 and 2009 or do i just file them under his SSN?

The next problem is that his spouse also has a schedule C for a tailoring business. She actually has a storefront that she rents. Her 2006 and 2007 schedule C are listed under her husband's name and SSN. Obviously the self-employment taxes were allocated to the wrong spouse. Is it necessary to amend these previous returns if they are not worried about who got credit for the self employment taxes? If I now file the 2008 return under her name, do I have to designate it as a new business? She is already depreciating equipment.

I will have future questions on these returns as I get deeper into them. Any help or advice would be appreciated.

Gary

What a mess! Maybe you should get the board opinion first on how much to charge.

I don't believe you need to have an EIN for 1099's. Wages would require one but wages were not paid, right?

For the biz of the spouse I would do it right now and not mark the box that this is a new biz. Just carry over basis from 2007. Unless their combined biz income was over SS limit I would not worry too much about amendment. I would, however, tell her that this would be the right thing to do and then leave it up to her.