Can i offset w2 income with schedule c loss in a related profession

[mwilson1]

I use turbo tax every year, the state of Arizona is auditing my 2012 return and disallowing my wifes milage and meal expenses on a schedule C for taking care of two down syndrome girls.  she receives a w2 from the state department of disability services. How do we claim the expenses properly

[WillK · Accepted solution]

Generally no. If you were an employee and had reimbursed employee expenses then you would use form 2106 to report those. 

To enter in the expenses in the program: Job-related expenses are reported on Form 2106 (Employee Business Expenses). 

Log on to your TurboTax account and click on the search button 

Enter in Form 2106 (Employee Business Expenses) Click the Jump to 2106 link in the search results. 

At the Tell us about the occupation you have expenses for screen, enter your occupation. 

Click Continue, and follow the onscreen instructions.  

To enter in the home office expenses: Log into your TurboTax account and click on the Business tab and select Continue 

Select “I’ll choose what I work on” and this takes you to “Let’s gather your business info” screen 

The first section down is Business Income and Expenses, choose Update You are now at the “Here’s  the business info we have so far” screen where you should see your Business listed 

Click Edit next to that business and on the next screen, scroll down to the fourth section which should be Business Expenses and select “Visit All”