I have a d/b/a with an EIN. At what point do I need to separate my business from my personal taxes? Is it based on income vs. expenses? What about 1099s?

[brfspeak]

In past years my personal income taxes mostly always offset any tax due on my business. I have heard if you file as a d/b/a you can only show loss 3 out of 5 years.

[MinhT · Accepted solution]

A DBA (doing business as) is not an entity but only a commercial name. If you registered a DBA, your business is still a sole proprietorship and you still have to report your business income and expenses on Schedule C within your personal tax return. Forms 1099-MISC you received are entered on your personal tax return.

As to the 3 out of 5 years rule you quoted, it is a rule that the IRS uses to determine whether your business is conducted for profit or is a hobby. If it is a hobby, the IRS will disallow any losses. This rule has nothing to do with whether you have registered a DBA or not.

According to the IRS, an activity is presumed for profit if it makes a profit in at least three of the last five tax years, including the current year (or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses).