2019 tax

[Anonymous]

  A new client who started his business, in 2019 didn't claim $ 20,000 on his 2020 tax return, cause his income was $40,000 and his expenses were $60,000, he was afraid that this will raise a flag.

 So what's the best solution for his situation.

By the way I asked the other group and I didn't get a response.

THANKS IN ADVANCE

[sjrcpa]

Amend the return or forget about it.

For your unasked question - no you can't claim it on 2020.

[Anonymous]

Good, so just to clarify, amend 2019, so what should he say, what's his excuse

[IRonMaN]

"he was afraid that this will raise a flag"

If he is doing things legit, he shouldn't be afraid of raising flags, unless of course it is being raised to half staff in his honor.

[IRonMaN]

Excuse?  Just say the return is being amended to reflect expenses that were omitted in error on the originally filed return.

[Anonymous]

just wanna mention that he came from a country where every one is guilty, unless you have a proof you're not

[qbteachmt · Accepted solution]

"just wanna mention that he came from a country where every one is guilty, unless you have a proof you're not"

But he signed the 2019 return, knowing it was incomplete. He's proving himself to be guilty. That's why you Amend it = make the correction and file with all the applicable data.

A business loss sometimes happens. In the IRS literature, you can read about this. Read about "hobby or business."