Deductions for a self employment startup

[tracy429]

I started a self employment career in 2020 and had about $1,000 in startup costs. I haven't earned any income yet. Can I deduct my startup cost on Schedule C if I haven't earned income? 

[DawnC · Accepted solution]

Only if your business is ''open'' for business.  “Startup costs are only deductible if your business does indeed start-up”  and they are not deductible until the year your business starts.  If you were operational in 2020, you can deduct the costs in 2020; you don't have to have earned income (or a profit) to be operational.   If you are not going to be operational until 2021, you start deducting the start-up costs then.   

Most of your startup expenses are treated as capital costs for tax purposes. The IRS considers them long-term assets—you’re investing in the future of your business.    Some startup expenses, such as organizational costs, can be either amortized or you can deduct the full cost in the year you open. But if you choose amortization, certain rules apply:

• The costs must be incurred before you open for business.
• The associated costs must have also incurred if your business had been operating for years

For more details, please see Startup Business Tax Tips