New Client - Schedule C

[jasdlm]

I have a new client. She is a designer and works out of an apartment, which she rents. Has an area which is exclusively used for business. Thinks she took a home/office deduction last year. In reviewing the 2007 return as I'm preparing 2008, the CPA who prepared the return actually took the following deductions on her schedule C:

Line 15 - Insurance (other than health): This is where he put 100% of her renter's insurance

Line 20( - Rent or lease of 'Other Business property': This is where he put 50% of the gross rents she paid for 2007 on her apartment

Line 25 - Utilities: this is where he put 50% of her utilities for her apartment.

Took full deduction for telephone on 'other expenses'.

No 8829.

Questions:

1) Should I file an 8829 for 2008?

2) Assuming 1 is yes (and I think it is), do I need to amend 2007? She told me that her BIH use last year was 50%. I went over the rules with her, and she contacted me 2 days later to say that she had measured, and it was actually 35%. I think the taxpayer is trying to do the right thing, here.

One more question unrelated to the 8829:

On this same return, mileage is listed on 'other expenses' attachment as X miles at .485 and then a total. I see this often. Is there some standard for determining when to use the 'other expense' line and when to actually use the auto expense line and enter the vehicle information, total mileage, etc?

Thanks!

[jasdlm]

Have no idea how I made that winking smiley face. I certainly wasn't trying to add a smiley.

[David1980]

B) becomes a smiley face. So that line was "20( - Rent or ..."

Yes, you should file an 8829. Having explained the possible consequences of last year's return being prepared wrong to the taxpayer you would leave it up to them to decide whether to do an amended return or not.

[jasdlm]

Thanks, David, for both answers!

[GLJEANNE]

Agreed, though I'd probably push her a little to amend.

As for mileage, I'll frequently put it under Other Expenses if it's only going to amount to a couple hundred dollars. It's just laziness, a level under which I don't feel like doing the extra work, and it's low enough that I don't think the IRS will care. Of course, it depends somewhat on the business - if it's one with very few expenses at all, I'm more inclined to do it right so it doesn't stick out.