Form 2106 and Schedule C Turbo Tax Business

[sjfarbs]

When filing last year , my State (iL) taxes were flagged due to not matching deductions.  The State claimed they needed to see deductions on form 2106 also show up on a Schedule C in order to accept the return.  

Line 1 on form 2106 = line 9 on Schedule C

Line 3 on form 2106 = Line 24a on Schedule C

Line 4 on form 2106 = 27a on Schedule C 

Is this true when filing Federal , do any deductions that show up on a Form 2106 (due to 1099 MISC income) also need to be carried over onto a Schedule C when showing additional income on a 1099 MISC not earned from your main job / employment.

[DavidS127]

The expenses you incur for income from a 1099-MISC do not go on Form 2106.  For Form 1099-MISC non-employee compensation income (box 7), you need to use Schedule C (income from self-employment) to report the income and associated expenses.  For 1099-MISC income, you are not an employee.  Instead, you are self-employed.

Form 2106 is used for non-reimbursed employee expenses.  Except for certain employees, these non-reimbursed employee expenses are no longer allowed at the federal level, but may be allowed at the state level.  Because of tax law changes, after 2017 Form 2106 is used only if you were an Armed Forces reservist, qualified performing artist, fee-basis state or local government official, or employee with impairment-related work expenses.  

[sjfarbs]

Thanks .  So it would seem Turbo Tax Business edition does not know this ?  It puts those expenses on the form 2106 .  So the fix would be to remove these expenses from 2106 and put them on the Schedule C ?  Does the form 2106 need to be deleted or just the expenses moved to the Schedule C ?

[KathrynG3]

Yes, TurboTax Home and Business does know this. However, some people could have unreimbursed employee business expenses and Schedule C self-employment income and expenses to report. Some states do allow a Form 2106 deduction for employees that do not qualify at the federal level.

Yes.

• For the current year when it has not yet been filed, the fix would be to remove the expenses completely form Form 2106 and put them instead on Schedule C. Yes, if the only reason the Form 2106 was included is gone, delete the form completely.
  • To delete the form, follow these steps:
     
    • From the left menu,s elect Tax Tools>
    • Tools>
    • Delete a Form
    • Scroll to Form 2106, click delete, follow through the prompts and click Done
       
• For current or prior years that have already been filed, then do not change the tax return until first triggering the amendment. Click this article link for the steps to amend your return.

[Anonymous]

there is really no need to use 2106 for schedule C.  as a matter of fact for 2018 and 2019 the use was restricted because the deduction for employee business expenses was eliminated.  the main purpose of the 2106 was to report employee business expenses.   if you are self-employed and apparently you are because you are filing schedule C,  you are not your own employee.  there are other sections in the schedule C to enter auto expense, entertainment, travel etc.  use them otherwise you could again have a problem with Illinois. 

[sjfarbs]

Thanks for all the answers.  I am not self employed and do receive a W2 from my employer , however earn additional income not related to my job that is reported on a 1099 MISC.  Any expenses associated with the 1099 MISC should go on a Schedule C and any non reimbursed expenses associated with my W2 should go on the 2106 .  Is that correct ?