Form 8903 Domestic Activities - W-2 wages

[KJ Judd]

New client going through divorce has given me a stack of paperwork. I caught up on delinquent sales tax returns and now am addressing the IRS notices.

I have a copy of his 2005 tax return including Form 8903 - Domestic Production Activities Deduction. On line 12, W-2 wages, it lists his Schedule C net profit. Is this correct? According to the form instructions & my understanding, this should only be W-2 wages. Can someone please confirm or deny?

Also on the Schedule C he has a taxes deduction with the detail listing "Payroll taxes - 941" and another "Payroll taxes-FICA". The guy doesn't have any employees.

I bet that's why I also have a notice from Social Security Administration for 2004 saying their W-2 wage forms don't agree with IRS forms 941.

Have you ever noticed how it's the ugly, messy ones that show up this time of year???

[Jiggers]

Mess

Retainer fee up front, bunch of retainer fee up front.

Must have W-2 wages, not schedule C net.

I would ask for the detail that the information on Schedule C came from: general ledger, P & L, whatever. Start from there.

For the 2004 SSA notice, same thing.

[KJ Judd]

I have a copy of his QuickBooks files so that is very helpful. I'll look there to see if I can figure out the payroll taxes thing. However, his soon to be ex-wife did the bookkeeping.