Why does Turbo Tax allow me to use the Performing Artist Deduction if my household income is above $16,000?

[TheAngeles3000]

When you enter your income first, shouldn't the software be able to quickly know that I'm not qualified for this deduction?

So why does Turbo Tax allow me to use the Performing Artist Deduction if my household income is above $16,000? 

Maybe the wording could be more clear, and perhaps I missed the "and" while I was deep into the funtastic doldrums of my household tax return, but I qualified for 3 of the 4 the following stipulations...

Qualified performing artist.

You are a qualified performing artist if you:

1. Performed services in the performing arts as an employee for at least two employers during the tax year,
2. Received from at least two of those employers wages of $200 or more per employer,
3. Had allowable business expenses attributable to the performing arts of more than 10% of gross income from the performing arts, and
4. Had adjusted gross income of $16,000 or less before deducting expenses as a performing artist.

In addition to a simple software fix (see first sentence above), some simple wording could be added (i.e. "YOU MUST ANSWER YES TO ALL OF THE FOLLOWING TO QUALIFY")  to avoid an IRS audit. 

On 11/01/2021, I received an audit for my 2019 taxes due to this wording and very simple software error, and now I will probably be audited for 2020 as well. If I had known I couldn't deduct these VERY COMMON business expenses, I would have definitely started an S-corp in 2020, to avoid this tax liability.

Please fix this error, as I'm sure I'm not the only person who has been audited for this very simple reason. I shudder to think what taxes and penalties lie ahead for everyone like me.  

If there is an elegant solution to this issue, I'm all ears, but WHY ARE WE PAYING FOR THIS SOFTWARE, IF THIS VERY SIMPLE SOFTWARE ERROR RESULTS IN US BEING UNNECESSARILY AUDITED? 

[rjs]

OP CHANGED THE QUESTION AFTER REPLIES WERE POSTED.

Audit Defense has nothing to do with the operation of the TurboTax software or the preparation of your tax return. Audit Defense is a service that assists you if you are audited or receive an IRS notice after you file your tax return.

The Audit Defense service is provided by TaxAudit in partnership with TurboTax. If you purchased Audit Defense for your 2019 tax return, you should call TaxAudit at 877-829-9695, or report your IRS notice on the TaxAudit.com web site. Do not contact the IRS until you have spoken to TaxAudit. They may contact the IRS on your behalf.

[Critter-3]

https://ttlc.intuit.com/community/charges-and-fees/help/what-is-the-turbotax-100-accurate-calculatio...

[TheAngeles3000]

I should have been more clear -- I hear what you're saying, but you're hung up on the words "audit defense". I've removed those words, so you and others can read [again]. This is a software issue that could have been easily avoided my being audited by the IRS.  

[rjs]

OP CHANGED THE QUESTION AFTER REPLIES WERE POSTED.

[Critter-3]

Contact TT support to discuss this issue and/or  put in an accuracy guarantee claim if the program failed you ... see the link I posted. 

[AmeliesUncle]

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@TheAngeles3000 wrote:

If I had known I couldn't deduct these VERY COMMON business expenses, I would have definitely started an S-corp in 2020, to avoid this tax liability.

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If this is a BUSINESS, your business needs to be reported on Schedule C, and you can take all valid business deductions.

If it is very irregular or small enough that is is not a business, a S-corporation is likely a very bad idea.  You would need to file (and pay) quarterly employer forms, Federal Unemployment (and maybe state) and a W-2/W-3 for the work that you do for the corporation (which is likely most or all of the profit).

[Anonymous]

It sounds like there were a number of issues with your return.   If you are discussing forming an S-corp then it sounds like you are in the business of being a performing artist rather than being an employee who is a  performing artist with a W-2 who is eligible to deduct work-related expenses under this special rule. 

You may have an accuracy related guarantee claim, which someone else has already shared some information regarding, but for the upcoming year it sounds like you need to hire a professional tax preparer. 

If you are not an employee you should never have been deducting those expenses at all in that area and they should have been fully deductible on your Schedule C.  If they were in both places - then that is likely your audit trigger. 

Also, this is based on AGI, but entering your income first doesn't automatically tell TurboTax what your AGI will be since many other entries can influence that number. 

[cwoods1]

I understand what you're saying but the statement does read: You are a performing artist if ...then it list 1-4 statements.  IF you didn't meet all 4 I don't understand why you felt you still qualified as a performing artist.  If all 4 wasn't necessary I think that is when the software would have said " if any of these applies" you're an artist but it doesn't.  Yes. it possibly could put a note that says if you don't meet all 4 then you're not a performing artist but I don't think it should have to when it again says from the beginning : YOU ARE a performing artist if:and then it clearly list the 4 things that made you eligible.   You then say about being a S-corp...well that takes you completely from being an employee and so that's a whole different BEAST to tackle.