Claiming a loss on taxes as a streamer who hasn't made any money yet

[Moses Rebel]

I recently made a massive investment into my streaming setup but haven't actually made any money from streaming yet. I'm not an affiliate yet or anything and have no actual streaming income and no 1099 from Twitch. I live in New Jersey, USA. Am I able to claim my streaming PC as a loss or is that only once you have income? I've never claimed a loss before or anything and only ever had normal taxes from standard jobs. Hoping a tax professional will catch this. Being eaten alive on taxes this year and this would be a huge help but don't want to delay my return or get into any kind of trouble for it.

[RobertB4444 · Accepted solution]

For this year your deduction for startup costs is limited.  You're allowed to deduct $5000 of what you spent - as long as you didn't spend more than $50,000.  If you spent $5000 or less it's easy - you take the whole deduction this year and you're done.  If you spent more than $5000 then it gets complicated.  Everything that you don't deduct this year needs to be amortized over the next 15 years.

Fortunately this is easy to do with TurboTax.  Tell it you have a business and then enter in your costs.  It will ask if it's new and then it will set up the amount that you are allowed to deduct for you.

This article has a lot more information on start up costs if you're interested.

[Moses Rebel]

I truly appreciate the response and pointing me to further information. To be clear, this is taking into account the fact that I haven't actually made any money from this business yet?

[RobertB4444]

It is.  One of the things that the article I linked to on my original response points out is that businesses often don't make any money for the first few years.  If you spent the money to start your business and the items purchased were ordinary and necessary then they qualify as startup costs.

[Moses Rebel]

Thank you for the help.

[Moses Rebel]

You've been very helpful, one last question, am I able to do this despite not having registered previously through tax forms. I didn't see that mentioned in the article you linked.

[RobertB4444]

Yes.

Everyone who files a schedule C has to file the first one some time.  This is your time.

[AmeliesUncle]

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@Moses Rebel wrote:

I'm not an affiliate yet or anything

If you have not made an ATTEMPT for income yet, your business has not started yet.  So those costs will not be usable as Startup Costs until your business actually begins.

[Opus 17]

If you are actively engaged in the business as of 12/31/21, then you file a schedule C and list your expenses and income.  You can deduct up to $5000 of startup costs, if your startup costs are more than $5000 then you can deduct some now and some over time, there's a formula.  If you lost money in your business, you can usually deduct that against your other income.  This all goes on schedule C, and you will need to use the Turbotax Self Employed version (online) or the Home & Business version (if you buy the CD or download to install on your own computer).  You don't have to make a profit to claim your expenses, or even get your first check, but you must be actively engaged in the business.

If you are only preparing for the business, and were not actively engaged in the business by the last day of 2021, you can't deduct your startup costs now, and you don't even file a schedule C with your 2021 return.  However, whenever you do start actively performing the business activities (I guess in 2022?) you would file a schedule C and can include your previously paid-for startup costs, even though you paid them in a previous tax year.