Incorrect full service taxes from 2021

[Jademon]

My daughter paid for full-service tax service last year. She felt very uncomfortable with the person that did them so I volunteered to do them this year. I am looking at her last years taxes and the guy put her fees from Paypal, Etsy, etc. on the schedule c under line 16 Interest b other. According to other information, this should be under line 27a other expenses. I have tried to contact Turbo tax but since there isn't an IRS notice, they won't talk to us unless we pay for special service not offered lowest tier for this year. How can we speak to someone about this since they are the ones that made the mistake? All of this is clearly listed in the paperwork and on live chat.

[Jademon]

Also, they didn't have her list ending inventory for the year after her first year in business. Should that have been filled out for the starting inventory of 2022. Shouldn't the tax preparer have told her she needed that for the schedule C?

[AnnetteB6]

Even though the fees from Paypal and Etsy were listed in the wrong category of Schedule C expenses, the bottom line of the Schedule C would remain the same.  Just report it in the correct category for 2022 and keep the 2021 records showing that it was on a different line for 2021.

As for inventory, if the inventory and cost of goods sold section of the 2021 Schedule C was filled in, there could have been an ending inventory value to transfer to 2022.  However, tracking inventory for a Schedule C business is not necessarily required unless the business income is greater than $26 million on average for the last three years.  Instead, the inventory may be expensed when purchased.  So, if there is simply a value entered for the cost of goods sold on the 2021 return, everything should be fine.

Take a look at the following TurboTax help article for more information:  Do I need to report inventory?