How to get tax break on penalty that was paid toward a business that is now closed?

[jgehlot]

I had business in 2013 that was closed in 2014. But I forgot to pay the fee that was $800. So in 2015 I paid $920 with penalty. Under what category should I put that amount to get tax break? Note: During the life of the business the profit made was $0

[AmandaR1 · Accepted solution]

There's no tax deduction for fees or penalties of any kind.  Additionally, 2015 expenses would need to be on your 2015 return.

Let me know more details and we can confirm this applies.

[jgehlot]

I am sorry the penalty was paid in 2016. But doesnt that fee+penalty that was paid toward a business that made $0 profit, so from businessman's prospective it was $800 loss. ($800 was fee and $120 was penalty). Thanks for your help.

[AmandaR1]

Business expenses are deductible, fees and penalties for not following rules (even because of business activities) are not. You're most welcome!

[AmandaR1]

If the fee was a regular business expense, then it would be deductible. You can deduct this under whatever category best describes the business purpose for your situation and industry. However, it looks like you're in Deluxe and the only way to deduct self-employed business expenses is on a schedule C, so you'd need to add your self-employed business to the software. This will require an upgrade but a loss will offset your other income, reducing your taxes.