Leave Business Address Blank on Schedule C

[TheWisdom]

Is it okay to leave the business address blank on Schedule C? My old tax preparer did that for all my previous tax returns when preparing them for me.

[AnnetteB6]

Yes, if your business does not have a specific location with an address and you operate it from your home, then you may leave that blank.

However, TurboTax may not allow the address field to remain blank.  If you find that to be the case, then you would just indicate that the business is operated from your home address instead of another fixed location.  The program will then include the address that you entered for your tax return as the address for the business.

[TheWisdom]

So, if other members of my family also use my home address for their businesses, that means multiple businesses share the same address. Is that acceptable to the IRS?

[AliciaP1]

Yes, that is acceptable.  If multiple people are using the same office for the home-based businesses, the home office expenses must be allocated appropriately and not taken in full on every business.

@TheWisdom 

[TheWisdom]

In the case where multiple people are using the same office for their home-based businesses, but only I claim the home office expenses and no one else does, then the home office expenses don't have to be allocated, right?

[AnnetteB6]

The expenses would not have to be allocated among the multiple businesses, but you must be certain that you are not claiming the entire office space on your return if it is being shared by others.  Even if they are not claiming the space on their own returns, if it is shared space, then your business would not be using it exclusively.  Exclusive use is a requirement that must be met in order to claim a home office deduction.

For example, suppose you have a 100 square foot space for the home office that is shared.  You cannot claim all 100 square feet as your exclusive and regular use home office because it is not exclusive only to your business.  You must divide the space further to specify exactly what part can be considered exclusive to your business and not shared with others.

@TheWisdom 

[TheWisdom]

Where can I find this number on my 2021 tax return? On which form and which line?

[CatinaT1]

[TheWisdom]

Is it okay for me to enter the estimate number by myself? Is an accuracy number NOT necessary?

Note: This is in the process of waiving the penalty.

[HopeS]

Yes, you should enter your estimates manually. The IRS will determine its own computation of penalty and interest so completing Form 2210 is important.

Review the link below for more information:

Form 2210

@TheWisdom 

[TheWisdom]

What if my estimates are incorrect?

[HopeS]

The IRS applies late penalties and interest on a case-by-case basis and will send a separate bill if penalties apply.

Because the IRS has the last word on penalties, we can't calculate the exact amount if your return is late. But the info below will give you an idea of what to expect in a worst-case scenario (courtesy of IRS Tax Topic 653).

There are two types of fees that may apply, plus interest on any unpaid taxes:  

• Late filing penalties apply if you owe taxes and didn't file your return or extension by April 18, 2023, or if you filed an extension but failed to file your return by October 16, 2023.
  • The late filing penalty is 5% of the additional taxes owed amount for every month (or fraction thereof) your return is late, up to a maximum of 25%.
•  
  • If you file more than 60 days after the due date, the minimum penalty is $435 (for tax returns required to be filed in 2023) or 100% of your unpaid tax, whichever is less.
• Late payment penalties apply if you didn't pay taxes owed by April 18, 2023, regardless of whether you filed an extension or not.
  • The late payment penalty is 0.5% (1/2 of 1%) of the additional tax owed amount for every month (or fraction thereof) the owed tax remains unpaid, up to a maximum of 25%.
  • For any month(s) in which both the late-payment and late-filing penalties apply, the late filing penalty will be reduced by the amount of the late payment penalty applied in that month. For example, instead of a 5% late filing penalty for the month, the IRS would apply a 4.5% late filing penalty and a 0.5% late payment penalty.
• Interest (compounded daily) starts accumulating on unpaid taxes one day after the due date of the return, until the bill is fully paid off. The current interest rate is 6% and is subject to change.

You won't face a penalty if:

• You file by October 16, 2023, provided you filed an extension and paid your tax bill by April 18, 2023, or
• You're getting a tax refund.
  • However, you must file your 2022 taxes by April 15, 2025 (or October 15, 2025, if you filed an extension). After that, any unclaimed tax refunds get turned over to the U.S. Treasury.

@TheWisdom 

[TheWisdom]

What does this mean? I'm referring to the highlighted section in the red box. What types of records do I need to keep/show?

[JulieS]

The type of records you need varies by the type income you have. You don't have to provide proof of how you figured the amount of income for each quarter when you file the return, but if you are audited, you may be asked to provide it. 

If you have a business, you can use your monthly or quarterly profit and loss statement. If you have investment income, you can refer to monthly statements, or your consolidated 1099 details to see when income was credited to your account and when gains and losses occurred. 

Some of your income is likely the same all year. If you receive Social Security, or a pension, that sort of income would be 25% of the total per quarter. 

[TheWisdom]

"your consolidated 1099 details to see when income was credited to your account and when gains and losses occurred." Are you referring to my bank account?