Schedule A
To prepare an accurate Schedule A, you should ask your clients sufficient questions to determine that the expenses that are being claimed are correct. The most common Schedule A issues are:
- Unreimbursed Employee Business Expenses claimed on Form 2106: Taxpayers may only claim allowable unreimbursed expenses.
- Mileage claimed on Form 2106: Taxpayers should provide you with documentation to support business miles claimed.
- Travel, meals and entertainment expenses: Taxpayers must have documentation of business purpose, as well as receipts to support expenses claimed.
- Charitable Contributions: Taxpayers must have receipts for all cash contributions and adequate documentation for all non-cash contributions.
Schedule C
To prepare an accurate Schedule C, you should ask your clients sufficient questions to determine that the expenses claimed are correct. The most common Schedule C issues are:
- Gross receipts not being fully reported: Books and records should be available for review.
- Business Expenses:
- Expenses claimed must be ordinary and necessary for the type of business reported.
- All expenses claimed must have been paid or incurred in the current year and the allowable amount of the expense must be correctly computed.
Schedule E
To prepare an accurate Schedule E, you should ask questions to determine income and expenses claimed are correct. The most common Schedule E issues are:
- Rental income and expenses are not properly reported
- Rental depreciation not being correctly calculated
- Limitations surrounding passive activities, basis and at-risk rules are not properly considered or calculated