Should labor be on line 3 form 1125-A?

[susan-m-marx]

turbo never prompts for it. Is this an error in software?

[MindyB]

It depends. 1125-A is for Cost of Goods Sold, and as per the IRS, "Labor costs are usually an element of cost of goods sold only in a manufacturing or mining business. Small merchandisers (wholesalers, retailers, etc.) usually do not have labor costs that can properly be charged to cost of goods sold."

If you have a manufacturing or mining business, and would like to populate wages on Line 3 of the 1125-A, here is how:

1. Once you have navigated to your business, choose "Add expenses for this work"

2.  Go to "Less Common" and page until you get to "Inventory"

3. Choose the pencil to the right of inventory and say "Yes, I have inventory to report"

4.  Answer the questions about your inventory, then you will get a screen called "Let's get the cost of goods for your work." There is a box for labor costs.  Input the amount here, and it will populate on Form 1125-A line 3.