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Mick53
Level 2

Federal tax return was rejected. IRS does not allow negative values on the Schedule C??

My electronic federal tax return was rejected.  The messages says that there are several amounts on the Schedule C for which the IRS does not allow negative values.  I imported information from Quickbooks and yes, the travel expenses has negative value because I spent some expense in 2019 and got paid by my client in 2020.  Because of that negative expense (relatively large), the total business expense is negative.  Just to fix this problem, I would like to modify and recognize some travel expenses reimbursed by a client as an income so that the total expense would become positive, but Turbotax does not allow me to change the travel expense number after importing it from Quickbooks.  I can modify other expenses, but not travel expenses.  Why?  How can I file the return electronically?

1 Best answer

Accepted Solutions
JoannaB2
Expert Alumni

Federal tax return was rejected. IRS does not allow negative values on the Schedule C??

It depends.  Since Turbo Tax didn't allow you to edit travel expenses, you may try to delete the imported information from Quickbooks and re-enter it manually.. The amount of reimbursement may be deducted in Quickbooks not in Turbo Tax, then enter the net travel expenses on Schedule C. For future reference, you may need to attach some good notes in Quickbooks.

 

Please, message us back, if the above steps resolve your issue.

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5 Replies
WendyN2
Level 6

Federal tax return was rejected. IRS does not allow negative values on the Schedule C??

When you are in the section for your Schedule "C", enter an additional line item of "General Income" (Not Reported on 1099-MISC or 1099-NEC) and list the description as reimbursed travel expenses. This will be enough of an explanation for the IRS.

 

Business Income > Business Income and Expenses > Business Income > "Any General Business Income" - and here enter the description and the amount you are trying to reduce the expense by.

Mick53
Level 2

Federal tax return was rejected. IRS does not allow negative values on the Schedule C??

Thank you for your advice.  Then, I need to reduce the same amount of travel expense, but there is no such place to change the value of the travel expense for some reason.  Any idea?

JoannaB2
Expert Alumni

Federal tax return was rejected. IRS does not allow negative values on the Schedule C??

It depends.  Since Turbo Tax didn't allow you to edit travel expenses, you may try to delete the imported information from Quickbooks and re-enter it manually.. The amount of reimbursement may be deducted in Quickbooks not in Turbo Tax, then enter the net travel expenses on Schedule C. For future reference, you may need to attach some good notes in Quickbooks.

 

Please, message us back, if the above steps resolve your issue.

View solution in original post

Mick53
Level 2

Federal tax return was rejected. IRS does not allow negative values on the Schedule C??

Hmm.  I think that solves the problem and I was thinking about that.  However, if I do that, I will lose all information I have already input to Turbotax, such as home office expense, business car related information.  Right?  If that is the only solution, I would do that, though.  Thank you for your advice.

Mick53
Level 2

Federal tax return was rejected. IRS does not allow negative values on the Schedule C??

I deleted the Schedule C I created and make a new one by manually input all information again.  That solved the problem and electronic tax return was done properly.  By the way, until 2019, I had no problem to file the return electronically even with minus value of the travel expenses.  I do not know if TurboTax changed something or IRS changed its requirement.  Thanks for your help.

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