Out of Scope Situations for VITA/TCE
The following are out of scope for this lesson. While this list may not be all inclusive, it is provided for your awareness only.
Schedule C with:
- Hobby income or not-for-profit activity
- Expenses over $35,000
- Returns and allowances
- Cost of goods sold (inventory)
- Expenses for employees
- Business use of home
- Contract labor
- Casualty losses
- Vehicle expenses reported as actual expenses
- Depreciation or the election to expense business assets (other than the de minimus expense safe harbor election)
- Rental or lease expenses—vehicle leases of more than 30 days
- Accounting methods other than the cash method
- Net losses
- A "No" response that indicates the taxpayer does not meet any of the tests for material participation, or is uncertain about materially participating in a business
- Taxpayers receive any credit card or similar payments that included amounts that are not includible in income
- A "Yes" response indicating there is a requirement to file Form(s) 1099
- Income from the manufacture, distribution, or trafficking of controlled substances (such as marijuana)
- Taxpayers who must answer Yes to the digital asset question on Form 1040
