Business Deduction Allowed?

[debkinla]

My husband is a self-employed aircraft mechanic who did not work in 2021 due to the pandemic (as we didn't have childcare).   We pay rent on some office space for him which he uses for tool storage and general business administration.  Are we still able to take a business deduction on this rent?  He had no income to offset this with, but as we file a joint return, I'm wondering if this can help offset my income on our taxes?  

[JulieS]

Yes, you can deduct his business expenses on the self-employment schedule and it may offset other income.

You can file a self-employment schedule with no income as long as the business didn't close. If he has returned, or intends to return, to this business when conditions allow, you can deduct the expenses even though there is no income. 

[debkinla]

Thank you Julie!  We didn't close the business per se but there is still some question as to whether he will return to his former occupation.  If he starts a new occupation, he will still use the space for similar purposes, so I'm hoping that this is OK? 

[AliciaP1]

If he starts a new occupation that does not constitute self-employment it will not be ok.  The 2017 Tax Cuts and Jobs Act eliminated the deduction for unreimbursed business expenses.  

[debkinla]

Thank you for that ... but can I assume at least for 2021 purposes, it is ok to deduct the expense as a business deduction? 

[ZoltanB45]

The unreimbursed employee expenses does not apply as your husband is an independent contractor. As long as he is attempting to run his business, you are good to write off the cost of the space. 

Next year, when he begins the new business, you can write the storage unit off for that business as well.