I started selling online recently and I issued customers full refunds for items they sent back or that were damaged. I understand those would defeinitely be included in Line 2 for Returns and Allowances on Schedule C.
I wanted to confirm if the following transactions would also be categorized as Returns and Allowances on my Schedule C form or not:
If they aren't caregorized as Returns and Allowances, how would I categorize them correctly? Thank you
All money returned that was reported in the total GROSS income amount on the Sch C go in the returns/allowance line. If the K-1 form you get includes the money that you eventually refunded then use the K-1 amount as gross and employ the refund/allowance category.
If you did NOT add it into income then you have nothing to deduct against ... so it really depends on your bookkeeping system and how you are accounting for the income and refunds.
All money returned that was reported in the total GROSS income amount on the Sch C go in the returns/allowance line. If the K-1 form you get includes the money that you eventually refunded then use the K-1 amount as gross and employ the refund/allowance category.
If you did NOT add it into income then you have nothing to deduct against ... so it really depends on your bookkeeping system and how you are accounting for the income and refunds.