Yes, you can claim
your business expenses, but not on your 2018 tax return. The general rule is
that business startup expenses are deductible in the year when active trade or
business begins. Since you had no income-generating events in 2018, your startup
expenses will become deductible in 2019, when your new business begins to
generate revenue. Please see IRS Pub. 535 Business Expenses for
more information.
Also, you must
distinguish between startup expenses
(licenses, permits, legal fees, pre-opening advertising, etc.) and the amount
spent on business assets (machines,
equipment, vehicles, etc.). These assets are depreciable over their useful
life, although in many cases can be expensed in the first year put in service
under Section 179 of the Internal Revenue Code.
Note:
The Tax Cuts and Jobs Act of 2017 increased the annual dollar limit on Section
179 deductions. For tax years beginning
in 2018, the maximum section 179 expense deduction is $1,000,000. This limit is
reduced by the amount by which the cost of section 179 property placed in
service during the tax year exceeds $2,500,000.
When you are ready
to file your 2019 tax return, TurboTax Home & Business (or TurboTax
Business if you have incorporated or created a partnership) will guide you
through the steps to enter information about these assets and make the correct
choices to expense or depreciate their value.
