Solved: Is it a good idea for small businesses (sole proprietorship) to itemize their Schedule C Part II Expenses (e.g., Advertising, Supplies) on a separate sheet of paper?
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Is it a good idea for small businesses (sole proprietorship) to itemize their Schedule C Part II Expenses (e.g., Advertising, Supplies) on a separate sheet of paper?

The tax professional who did my taxes last year did that, so the IRS could see exactly what my Office Expenses, Advertising expenses, etc. consisted of. I was thinking it might help answer questions that could trigger an audit. Of course the opposite could also happen if some of the itemized expenses raise questions that might not have otherwise existed. How common is it for sole proprietors to itemize their Schedule C Part II Expenses on separate sheets of paper, and is it a good idea to do this?



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Level 15

Is it a good idea for small businesses (sole proprietorship) to itemize their Schedule C Part II Expenses (e.g., Advertising, Supplies) on a separate sheet of paper?

You should itemize your expenses and keep them in your records. It is unlikely that anyone at the IRS would ever see a sheet of paper attached to your tax return with a list of itemized expenses. If they ever question the expenses, you will have the detail in your records to provide to them.

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Level 15

Is it a good idea for small businesses (sole proprietorship) to itemize their Schedule C Part II Expenses (e.g., Advertising, Supplies) on a separate sheet of paper?

You should itemize your expenses and keep them in your records. It is unlikely that anyone at the IRS would ever see a sheet of paper attached to your tax return with a list of itemized expenses. If they ever question the expenses, you will have the detail in your records to provide to them.

View solution in original post

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Level 15

Is it a good idea for small businesses (sole proprietorship) to itemize their Schedule C Part II Expenses (e.g., Advertising, Supplies) on a separate sheet of paper?

The IRS doesn't care about the level of detail in the Sch C expenses section ... what he did was probably for your benefit so you could double check all your figures which is not a bad idea. (or he padded his bill with all the excess entries)  You should use the 17 preset expense categories first, then if you have an expense that doesn't fit in any of those use the misc expenses section to make your own category.  

Detailed statements will not trigger or prevent an audit but if you mail in the return it just gives the input operator more chances to make a data entry error.  How detailed you want to go is up to you ... best thing is to keep good records that support all your deductions in case you are ever audited. 

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