When a taxpayer receives more EIC after adding a Schedule C to their return than...
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Accounting
When a taxpayer receives more EIC after adding a Schedule C to their return than they would have received without it, the tax preparer must:
A. Documents in EIC Notes the amount of EIC with and without Schedule C and advise the taxpayer that they are a likely candidate for audit.
B. Omit schedule C from the return and include the income on Schedule 1, line 8n. as nonemployee compensation not subject to self-employment tax.
C. Apply sound judgment band common sense to the information provided and provide question-and answer documentation to show the questions asked and the taxpayer's
D. Not include expenses on the schedule C by making an adjustment to the income reoported on the Schedule C.
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