Hi,
We filed our 2013 taxes and included a Schedule C for my wife's expenses as an artist (her sole occupation). The initial thought was she is in the "start up" part of her career and the expenses being incurred are reasonable, however, she is now very concerned that she will not be able to show a profit over the next several years to meet the IRS's requirements and we would have been better off to not include the expenses at all as it would be considered a hobby by the IRS and will very likely be subject to an audit and penalties.
If we want to re-file (we have already received our refunds, state and federal) and remove the Schedule C how would we go about doing that? I have seen the IRS 1040X but I'm not sure if that is the correct way to proceed or not.
As an aside, if we simply we try to make this business work for a year or so (she does have some advertising expenses, trade shows, etc.), saw we would not be profitable and are do not submit future Schedule Cs, what are the ramifications? From what I saw, if you close your business you simply stop submitting Schedule C but if you never turn a profit, I'm not sure if that changes anything or what the procedure would be.
Thanks in advance.
We filed our 2013 taxes and included a Schedule C for my wife's expenses as an artist (her sole occupation). The initial thought was she is in the "start up" part of her career and the expenses being incurred are reasonable, however, she is now very concerned that she will not be able to show a profit over the next several years to meet the IRS's requirements and we would have been better off to not include the expenses at all as it would be considered a hobby by the IRS and will very likely be subject to an audit and penalties.
If we want to re-file (we have already received our refunds, state and federal) and remove the Schedule C how would we go about doing that? I have seen the IRS 1040X but I'm not sure if that is the correct way to proceed or not.
As an aside, if we simply we try to make this business work for a year or so (she does have some advertising expenses, trade shows, etc.), saw we would not be profitable and are do not submit future Schedule Cs, what are the ramifications? From what I saw, if you close your business you simply stop submitting Schedule C but if you never turn a profit, I'm not sure if that changes anything or what the procedure would be.
Thanks in advance.
