Do I HAVE to Claim Expenses?

[rmc20021]

I just started my business up January 2012, however went several months with only one child and only had another one the last 2-3 months of the year so my income from the business itself wasn't much.
I had other income from homehealth care which was taxed minimally.
Because I also have foster children, I was able to claim them on the food program which produced income, but in the same respect I spent that amount on food and planned on claiming that amount as well as some minimal expenses such as for office supplies and advertising.
All my start up costs I spent in 2011, before I actually started the business.
I can claim the earned income for my foster children, so do I HAVE to claim all my expenses which will reduce my income amount, but give me more of a tax return due to the earned income credit.
I filled out a return on H&R block based on these things and found it to be beneficial, but I'm sure the amount of the return would go down if I claimed every expense I had in 2012.
I want to know what to expect before I pay someone to do my taxes, or can I do it the way I described and file online myself???

[Familycare71]

I used to have a CPA do my taxes (I now use turbo tax) and he used to only use certain expenses because of the bell curve of the eic. He then found a law that said we could not do that... I would contact a tax specialist to see what they say tho- the people who do your taxes at h&r block are not tax professionals- they get about a 10 hour training to do your taxes- I know this becaus do had a friend who worked there...

[rmc20021]

thank you...I was just wondering how that would work and if it would even be legal or not. I was just playing around with it online to see what the possibilities might be before I actually file them. And I was wondering why it wasn't more specific...like everyone talking about their time and the use of their home, there were no questions about that.

And I know what you mean about H&R not knowing what they're doing. Last tiime I had mine done there, I had to actually tell the guy what to do and he still couldn't get it. I think he was about 90 yo.

[Brooksie]

I'm actually in that same boat. My return PLUMMETED to basically nothing bc of all my expenses and there for said my income was like $1,000. I was devastated and really needed that earned income credit. I didn't know what the issue was but now you have me thinking if I don't claim my expenses my return may be bigger. Is that right or even allowed?

[nanglgrl]

Yes, you can definitely get less of a return if you have a lot of expenses and you qualify for the earned income credit. The credit is based on your earned income (so income after expenses). It's also correct that you must claim all expenses not just the expenses that are beneficial for your return. When claiming an expense though only claim it if it can stand up to an audit. Do you have a receipt? Is it clear on the receipt what you bought? has the ink faded on the receipt? etc.

[Brooksie]

Thanks for the info!! I think I'm going to go back through my receipts.

[TomCopeland]

Earned income credit

I used to have a CPA do my taxes (I now use turbo tax) and he used to only use certain expenses because of the bell curve of the eic. He then found a law that said we could not do that... I would contact a tax specialist to see what they say tho- the people who do your taxes at h&r block are not tax professionals- they get about a 10 hour training to do your taxes- I know this becaus do had a friend who worked there...

It is against the law to not claim some business expenses in order to claim a higher earned income credit.

The reimbursements you received for foster children is not income and you cannot claim the food served to your foster children. The reason you got these reimbursements is because your family was low income. This is considered a "benefit" and not taxable. See IRS Publication 587.

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