Each separate business requires a separate Schedule C. You cannot combine different entities on a single Schedule C. The IRS will assess a 25% accuracy penalty for a combined Schedule C.
If you have one business but both spouses work in the business each can file their own Schedule C. The Schedules C do not have to be a 50-50 split of income and expenses. What the split does is it separates the Social Security taxes and benefits for each spouse.
The split also defines the "legal ownership interest" in the business. Nevada is a community property state and ownership is assumed to be 50-50. By splitting the ownership with two Schedules C the issue may be resolved before it becomes an issue.
The new and revised Schedule C has a new income line to report the credit and debit card income separate from the cash and check income. Your credit card processor will provide you a 1099K in January.
The one issue that has not changed is the activity a Business or is it a Hobby. Business losses are deducted on the tax return. Hobby losses are used only to offset Hobby income. If you have losses 3 out of the past 5 years then it is up to the business owner to prove to the IRS that this is a business. You prove it is a business by showing that you maintain a separate business account, you maintain all the books and records of the business or hire KatTax to do them for you, you belong to the Chamber of Commerce and you take continuing education classes. You want a business not a hobby.
No comments:
Post a Comment