Other misc expenses on Schedule C double counting start up costs

[am1030]

We are qualified joint venture (married couple filing jointly and equal partners of business) and entered all expenses for 2024 50/50. We started the business in 2024, so entered all "startup costs" for both of us, chose to deduct $2500 for each (for a maximum of $5k) and turbotax amortized the overage. The issue is that I see $2500 under "startup costs" but it seems to be included in the "other misc expenses" as well for both of us. When I click on "other misc expenses" it only shows me the one expense I entered, so I don't know how it is calculating the additional $2500. So, we are showing an additional $5k in expenses that are not accurate. Since I am not able to view the Schedule C form (I'm using online turbo tax) I can't see what is going wrong.

This is what I see under our self-employed expenses for both of us when I click on self-employment details:

Startup costs -$2500

Other miscellaneous expense - $2554 (this is made up of $47 expense and $7 amortized cost and what I assume to be a duplication of my $2500 start up costs since it is the exact amount)

Any help? Thanks!

[PatriciaV]

You may need to go back and either 1) review/edit your entries for startup costs or 2) delete (trashcan icon) your original entry and try again.

If you enter more than $5000 on the Startup Costs expense topic, TurboTax cautions you to claim no more than $5000 as a current year expense. Any remainder is automatically amortized.

A successful entry under this topic will show Startup Costs $5000 and Other Miscellaneous Expenses of $XX (the annual amortization amount) under Expenses.

Do not enter the startup costs in any other expense topic of Self-Employment.

[am1030]

I deleted out the start up costs for me and my spouse - since we own the company equally I had to create the business under both of our names, and I was putting all the exact same costs for us both (50% of the total). Once I deleted out the start upcosts, I entered one cost to make sure it is working... what I noticed is that when I enter a 'start up cost' under my spouse, it automatically adds that same amount under my 'other misc expenses' category. That is why my costs were initially wrong, because it is automatically adding the start up costs from the other person into the other misc expenses. By doing this, I am not able to enter all my start up costs because they will be double counted in the other person's misc expenses.

If I enter 50% of all start up costs under my spouse, and it automatically creates the same amount under my misc expenses, the total expenses will be correct, but then the amortized amount wont' be right because the costs over $5k would not be entered as a start up cost.

Spouse start up = $500

Spouse other misc expenses =  $0

My start up = $0

My other misc expenses = $500

Is this supposed to happen, that the start up costs from one spouse are automatically added as a misc other expense for the other spouse? This is all because turbotax requires us to enter both partners separately rather than being able to associate us both to one self-employment entry.

[PatriciaV]

The IRS requires two Schedules C for a Qualified Joint Venture owned by a husband and wife (see reference below). 

TurboTax should treat those businesses separately. Are you using the same business name and/or EIN number? That may be the issue. Add your first name at the end of the business name on your Schedule C and do the same for your spouse. 

Also, delete (pencil icon) all entries related to startup costs. Then enter half of the cost on one Schedule C. You'll need to enter the amount over $5000 (half for each spouse) under Assets >> Amortizable Intangibles with a 15-year class life. This will record the amortization as a miscellaneous other expense.

For more information, see IRS Election for Husband and Wife Unincorporated Businesses.

[am1030]

I thought that might be the issue, so I added our names to the business name as you suggested, deleted out the start up costs. I then added one start up cost of $250 as a test under my spouse "start up costs" category and it still automatically population under my "other misc expense" category. So then I removed the EIN from both of our accounts and repeated - the $250 still showed up in both. I deleted both of our self-employment entries entirely, then set-up mine again from scratch, and that same $250 is still showing up in "other misc expenses" and I had not entered anything and had not even entered a self-employed company for my spouse yet!

I don't know why it keeps doing this?! And I can't preview the Schedule C to see what is happening - but if I deleted all self-employment details out completely and started from scratch, it can't be from anything I entered since the $250 expense is just there... What I'm trying to do is very simple and straightforward, I just can't get past this duplication issue!

I appreciate your help, so please let me know if there is something else that I'm missing.

[am1030]

Also, I cleared my cache and cookies to ensure something was stuck or looping, but that hasn't helped either. I have fully deleted both of our self employment details multiple times, and every time I create my self employment, it automatically populates the other misc expenses with $250 - this is before I have entered any income or expenses, as I 'skip' that. I have tried to delete the 'other misc expenses' at the summary level (when I click into other misc expenses, it shows no expenses) and it allows me to delete, but then the $250 still shows up.

This seems like a technical / IT issue but I don't know who to contact outside of this forum. I should not have to upgrade my turbotax for a "tax expert" when this is not a tax question and just a turbotax issue.

Thank you for the help!

[DawnC]

Are you using the desktop software?  

[am1030]

No, the online version. And I've tried in three different browsers, each time logging out of the other and clearing the cache before logging in again.

[DawnC]

Okay, I see that now.   Can you send us a diagnostic copy of your return so we can take a deeper dive...It is a copy of your tax return that has all of your personal information removed (sanitized).  You can send one to us by following the  directions below:  

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen. 
3. A drop-down will appear.  Select Tools  
4. On the pop-up screen, click on Share my file with agent.
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in a reply to this message.      Thank you!   And please include the name of any state returns that are attached to your file when you reply with the token number.  

The AI may try to delete the number so feel free to reply back with a screenshot of the number if so....

[am1030]

Done - token # 1290653

Includes state return for CO

Thank you! Please let me know if there is anything else you need.

[am1030]

@DawnC were you able to receive my token # and investigate this issue? I logged into turbotax again today and still see the $250 in my other misc expense category, but do not want to delete anything if you are looking into this. Thank you.

[DawnC · Accepted solution]

Yes, I did review your return and see one Schedule C with $250 in miscellaneous income.   Delete the IRC 195 (business name) form.  

How to delete forms in TurboTax Online

I deleted that form and the $250 went away.    Then I added $2500 of start up expense to that Schedule C.   Then I added a 2nd Schedule C (owner name your spouse), and added $2500 of start-up expense to that Schedule C.   After you enter the amount of the start up costs, the next screen asks how much you want to deduct.  I tested expensing it all and also deducting half and amortizing the rest with no issues.  And neither Schedule Cs has any entries in Other Misc Expenses.   

2 new Form IRC Section 195s will be regenerated.  Your half of the excess over $5K should go on your Schedule C as a Asset and same with your spouse.  

[am1030]

This seems to have worked, but I also had to change the "work description" to not be the same. I was able to delete the form and the misc expense went away, but then when I added a new schedule C it populated again. That's when I changed the work description to be different and it went away again.

Advice for anyone is to make sure the work description and business name are unique and not the same.