Losses/expenses from previous years

[Mikeee]

Hello, I have been getting Jackson Hewitt to do my taxes for the past 4 years. Basically since I started self employment. Every year I end up with a bill ranging from $8000 to $12000. It seemed outrageous to me and now I am on a payment plan that will probably never end.

This year I extended my tax due date 6 months. Now Im ready to file for 2005 but what I am hearing from a lot of people that they are writting off tons of things that I could have as well. But I never did because I trusted Jackson Hewitt to let me know what I can and cannot write off.

My problem is it is a lot of money. If I go back to 2002, 2003, 2004 and write everything off from those years, I would be writing off almost as much as I made last year, if not more. I never really profited the first few years and thats why Im in a hole with the IRS and owe them over $20k.

My questions is, CAN I write off this year, expenses from previous years? How far back can I go and do I have to refile those years? Or can I just write it off this year?

I appreceate any input.

[Uncle Sam]

Losses/Expenses from previous years

First, the most you are able to go back to claim expenses and refunds of overpaid taxes is three years from the filing date. So, for 2002, filing date 4/15/03 + 3 years - 2002 statute of limitations has passed. That's gone.
Regarding claiming of expenses not previously claimed, you must claim them in the year in which they were incurred. You cannot accumulate prior years' expenses and lump them into the current year. Each year stands on its own - so amended returns would be necessary for tax years 2003, 2004, and 2005.
Next, before you claim these expenses, you must first determine if, under the tax law, they are permitted, and under what circumstances they were incurred.Without knowing the details, no one posting here on this board can advise you in that regard.
Third, I wouldn't completely rely on public knowledge of some extreme cases of any preparer, no matter who they are, without getting into the specific examples of exactly what information was or was not reported on a given tax return. Very often, the news media has the habit of taking the most extreme cases and blowing them up out of proportion - not to say that the actions taken didn't involve inaccurate tax preparation.
I strongly suggest you take your tax return information to another qualified tax preparer - whether it be a CPA, Attorney, or Enrolled Agent - and have that person review the file to determine if amended returns are appropriate.

[jainen]

Give us a couple

>>they are writing off tons of things that I could have as well<<

Give us a couple of examples of expenses you wonder about. And tell us, did you include them in the P&L or other business records you gave your tax preparer?

[Jiggers]

Professional Tax Preparer

I would strongly suggest that you contact someone other than JH. Find an Enrolled Agent or CPA. Attorney's know didly squat about taxes. I do tax returns for attorneys because they don't know anything.

[solomon]

For example

As Jainen said, give some concrete examples of what was not included on your Sch C.

[BP.]

taxes due means you made $

And maybe provide an explanation for this statement: "I never really profited the first few years and thats why Im in a hole with the IRS and owe them over $20k." Huh??

[Mikeee]

And maybe provide an explanation for this statement: "I never really profited the first few years and thats why Im in a hole with the IRS and owe them over $20k." Huh??

Im saying I did not make profit, but due to Jackson Hewitt not letting me write off some expenses, I ended up with a debt to the IRS.

Here are some examples. One of my billing proseccers owed me 16,000 dollars. They went out of business and disapeared. Jackson Hewitt said I cannot claim that as a loss. But I say it is because products were delivered and money was never remitted to me.

Also, I had a custom car shop build me a car to take to car shows and promote my business. They asked me if I ever used it for private use and I said yes. They said I cannot write off the money I spent on this car, which is over 15,000 dollars.

In 2003 not a single electric, phone, cable bill was deducted. Not even a portion of them.

Miles, I was told I can write of miles going back and forth to car shows. Jackson Hewitt said no.

[S T]

More Info

What type of business are you engaged in? What type of product is delivered and you weren't paid for? Do you have inventory? Are you a manufacturer?

You really should seek the guidance of an Enrolled Agent or CPA in your area, not only for the preparation of your 2005 return, but to also review your prior years returns.

S

[Unregistered]

Expenses

It looks like you spent your tax money on your hobby.

[jainen]

expect some taxes

>>It looks like you spent your tax money on your hobby<<

And it looks like Jackson Hewitt was right. Uncollected sales is definitely not deductible. The custom car that you use personally is only deductible if it has a bona fide business purpose other than general advertising. Electric, phone, and cable may or may not be documented business expenses, and I'm positive anyone at JH knows the difference.

I don't know who is teasing you with wild dreams of write-offs, but if it is a tax professional why don't you just ask him to fill out and sign the return? It would seem you're making pretty good money; you should expect some taxes.

[Unregistered]

>>It looks like you spent your tax money on your hobby<<

And it looks like Jackson Hewitt was right. Uncollected sales is definitely not deductible. The custom car that you use personally is only deductible if it has a bona fide business purpose other than general advertising. Electric, phone, and cable may or may not be documented business expenses, and I'm positive anyone at JH knows the difference.

I don't know who is teasing you with wild dreams of write-offs, but if it is a tax professional why don't you just ask him to fill out and sign the return? It would seem you're making pretty good money; you should expect some taxes.

I find rude of you to assume its a hobby. Not everyone is familiar with tax laws, there are many many poeple who miss out every year. I agree with him that Jackson Hewitt is a ripoff. I seriously dont think you know what youre talking about and that is not a good thing because youre replying to some serious questions. Not that I advise anyone to use this forum for advise, but you know people will. Please educate yourself before throwing worthless words around like that, just makes you look bad.

Well this is why I never register, sounds like people rather criticize ones lifestyle than help.

[BOB W]

Facts

You are complaining about issues that are just not deductible. Before you file a return you should of checked with another preparer. If they came up with a similar answer then you know what is deductible and not deductible.

As you can see, all that have answered on this board agree with HJ, for the most part. They are only working with the facts supplied as you never answered their questions.

[Bees Knees]

I find rude of you to assume its a hobby. Not everyone is familiar with tax laws, there are many many poeple who miss out every year. I agree with him that Jackson Hewitt is a ripoff. I seriously dont think you know what youre talking about and that is not a good thing because youre replying to some serious questions. Not that I advise anyone to use this forum for advise, but you know people will. Please educate yourself before throwing worthless words around like that, just makes you look bad.

Well this is why I never register, sounds like people rather criticize ones lifestyle than help.

Hobby loss rules are a part of the tax code, and it is a legitimate issue to raise. The tax law says that if you are engaged in an activity that has little chance for making a profit, while at the same time you derive a great deal of enjoyment, it is a hobby and you cannot deduct losses. That is Internal Revenue Code Section 183.

It is also inappropriate to label an entire organization such as Jackson Hewitt a “rip-off.” Would you like your former clients going to others and calling you a rip-off because they disagreed with the tax rules you applied? You don’t know whether these expenses were qualified expenses or not. The poster clearly indicates a lack of basic tax rule knowledge by thinking money not collected is deductible. That is basic tax prep 101. More than likely, JH did an excellent job on this return.

I suggest you register and come on this board and debate tax topics with us, rather than hide in the unregistered state you are in. You have the freedom to hurl criticism back at us without having to identify yourself. I surmise, you are either a PPC employee trying to cause trouble on this board because you can't get over the sorry state of your own, or you are an overly sensitive individual that cannot deal with debating issues on message boards without turning everything into a personal attack.

[jainen]

weighing your opinions

>>Well this is why I never register<<

Such reasoning would make more sense if you didn't post at all. Registration helps forum members appreciate your comments more. After a few posts we begin to recognize certain viewpoints. We understand the comments through the viewpoints even if we don't agree. When you switch names or don't identify yourself, each post starts anew. We don't have any basis for weighing your opinions.

[Jiggers]

Questionable numerous items

When there are many items that the original poster is questioning, I find it difficult to give a good answer without seeing the tax return. There are just too many items that could have different answers if all the facts are known. One obvious one that hasn't been asked is what was the taxpayer living on if he has more expenses than income. Some of the items look like hobby items, but this may be a professional driver. As far as utilities, phones, etc., were these in the business or home and for what business. On and on and on. Like I say, just too many questions without looking at the whole picture. I go back to my original post about seeking professional help, such as an EA or CPA. JH has many good employees and offices. If the taxpayer has questions, he should go back to the original preparer for satisfactory answers and/or take the return to an EA or CPA for reviewing and amending if necessary.