How to revert back to original return data after starting amending

[DawnC]

Do you have a copy of the original return you are working with?    Is your QBI deduction on Line 13 the same?    Your taxable income determines when you have to use 8995-A.   

Form 8995 is the simplified form and is used if all of the following are true:

• the individual has qualified business income (QBI), qualified REIT dividends, or qualified PTP income or loss;
• taxable income before QBID is less than or equal to certain thresholds - See this TurboTax FAQ

How to get a tax return copy from the IRS.

[sept031989]

Yes I have the original return. The original return uses simplified 8995 and the TT Desktop Forms is using smart worksheet and it’s tied to Schedule C. The difference between the two is beyond my comprehension and I don’t trust myself trying to translate stuff to an amended file and causing what I’m trying to avoid in the first place. Whenever I ask for help from a TurboTax CPA or staff they refuse to help do something like translate my return to TurboTax UI forms. Any way to get the Desktop app to mimic my real return that I was able to download from TurboTax for 2022?

[PatriciaV]

What inventory change did you need to make on the amended return? Did you file Form 3115 for a change in accounting method? Or did you simply change from reporting inventory to expensing your materials and supplies? Some inventory changes require an amended return. Others can be simply reported next year.

That said, if you have installed TurboTax Desktop 2022 on your computer and also downloaded your 2022 TurboTax .tax file, you should be able to open the 2022 tax file using the TurboTax 2022 software.

However, if you have made changes to your 2022 return since it was filed, you will either need to reverse the changes you made or create a new 2022 return based on a hard copy of the return as it was filed with the IRS.

TurboTax Online doesn't keep any history of changes to your return. And you would need to save backups to your own hard drive in order to have incremental tax files that would allow you to walk back to a place before you made changes.

Manual entry of a new 2022 tax return is your best option. You have three years from the original filing date to file an amended return.

[sept031989]

It’s for an eBay store and I accidentally used the cost? method that requires the same inventory BOY and EOY and that’s not correct because our inventory always changes on a whim. The values I put were correct but the method is wrong. Someone suggested I go back to 2022 when I started eBay selling and amend 2022, 2023, and 2024 to reflect the changed cost of inventory method. I’m not an accounting specialist or anything so getting me back to my original 2022 filed form is quite the challenge. It has been slightly over 3 years since the 2022 form was files.

[PatriciaV]

If your gross receipts from sales were under $26 million over the last 3 years, you are not required to report inventory. Most small businesses report the purchase of inventory as Merchandise Expense (or Materials/Supplies).

If this applies to you, instead of amending three years of returns, simply report zero ending inventory next year. Report the beginning inventory balance as an expense, either with your other purchases or as a separate line item under Other Miscellaneous Expenses. After that, you don't need to include inventory or Cost of Goods Sold on your return.

This is not a change in accounting method. You have liquidated your inventory so you can expense items as they are purchased.

See IRS Pub 334 Inventories

@sept031989 

[sept031989]

I have to amend 2024 already because a 1099 was mailed to the incorrect address. Should I do what you’re saying on the amend or wait until 2025? Is there someone who could help me do this change for next year? What you’re saying makes sense but I have no idea how to translate that to my BOY inventory for next year. But the way you are saying to report my inventory in the future sounds exactly like what I should and will be doing moving forward. This would make my life so much easier vs. amending 3 years of filed returns.

[fanfare]

I suggest you report the correct inventory on your 2025 tax return.

OR your 2024 tax return if you are amending anyway for some other reason.

@sept031989 

[sept031989]

Also, what would I write as the “reason” for this? And where it asks for beginning of year and end of year inventory costs, I leave both blank and just enter my inventory under Misc. Expenses/Supplies?

[PatriciaV]

If you plan to make this change in 2025, then on your 2025 return (filed in 2026), you would have a beginning inventory equal to your 2024 ending inventory. Your ending inventory for 2025 would be zero. The difference between the two will be reported as Cost of Goods Sold (an expense). 

No explanation is needed to do this. If you need a reason, you have liquidated your inventory. That's why it's zero at the end of the year.

Report all 2025 purchases of merchandise as a business expense (under whatever category you choose). That's all there is to make the change.

[sept031989]

If I choose to do this on my amended 2024 return, would the same logic apply? If say my inventory total for that year as an eBay seller was $50,000 and my beginning cost of goods sold was $25,000, I put 0 for EOY and just put the $50,000 in miscellaneous costs/supplies still?

[PatriciaV]

Yes, the same logic applies. It's the change in inventory that is reported as COGS, which in your case would be $25K. The "inventory" you purchased would be the miscellaneous expense.

Ending Inventory = $0

Less: Beginning Inventory = $25K

Equals: COGS = <$25K>

[sept031989]

So the miscellaneous expense would be $50k after adjusting the BOY and EOY inventory?

[DawnC]

Yes.  Your beginning inventory on the 2024 return should match the ending inventory on the 2023 return.    The ending 2024 inventory should be zero.   Then on all future returns, use zero for the beginning and ending inventory amounts.   All of your purchases will be expensed immediately instead of flowing through the inventory account.  See Do I need to report inventory? 

You only need an explanation if this year's beginning inventory does not match last year's ending inventory.