Expenses, no income as real-estate agent, a different kind of question, please read.

[hadzos]

Hello, I hope you're all doing well.

Unfortunately, I had a rough income year altogether. In previous years, I've claimed 1099s (when received) along with Schedule C (expenses). Additionally, I have a part-time job with a W-2. However, 2024 was particularly challenging for me. My W-2 income was minimal, and I had no income as a real estate agent.

When I reached the section for claiming expenses, my tax refund actually decreased. With that said, here are my questions:

• Am I obligated to file Schedule C in my situation? If I don't, I could potentially receive a larger refund.

• Will not filing Schedule C trigger an audit?

I'm considering filing it anyway since I have been doing so, but I’m concerned about losing out on some of my refund (which, by the way, I don't entirely understand why this is happening).

Thanks in advance!

[MinhT1 · Accepted solution]

One probable reason is that some income-based credits such as the earned income credit will decrease when you enter more rental expenses and decrease your taxable income.

The Earned Income Tax credit (EITC) is a bell shaped curve against income. The EITC rises with income until a certain level of income when it starts to decrease to reach 0 at the maximum level of income for the category.

As an example, please look at the EITC tables from page 28 of this IRS publication.

If your business was active in 2024, you have to file Schedule C

Please also note that the law requires you to deduct all allowable expenses and not leave out some to increase your income-based credits.

[hadzos]

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@MinhT1 wrote:

Please also note that the law requires you to deduct all allowable expenses and not leave out some to increase your income-based credits.

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I appreciate your confirmation. I'll continue to claim all expenses regardless of the impact on my return. I've consistently done this for years and was almost certain I'd do it again, but it's good to have clarity. Thanks for your response. Take care and be well!