Yes, The IRS allows taxpayers to write off the loss from a business on your personal tax return. Example, if you have a regular “day” job, you can use the loss from a side business to offset your W2 or other income. For more information, please see; Taking Business Tax Deductions. I have included instructions below on how to enter the information for your business in TurboTax.
In addition to TT Melaine's response, keep in mind the hobby loss rules. If a business is not profitable in at least three out of five years, or profits are small in the three profit years and losses are large in the two loss years, the taxpayer must prove the activity is a for-profit business under the facts and circumstances test to avoid the hobby loss disallowance rules. Just an FYI.
I have a full time job and work as a freelance videographer as a side job. How do you prove that you are a for profit business organization? What are the steps I should take? Thanks so much!
I closed my business but still had 10 months remaining on the 3-year lease I signed. I paid for those months with no business income. Can I deduct that expense from the wages I earned from my new full time job?
You can't deduct the expenses against your salary income.
However, since the rent is associated with the business you owned, you can deduct it as a capital loss. You would enter it as a investment sale, and report the rent as the cost of it, with no sale amount listed. You would report it as follows in TurboTax:
1. Find the "Income and Expenses" menu option in your TurboTax program
2. Find "Investment Income" in the list of categories
3. Click on "Stocks, Mutual Funds, Bonds and Other"
4. Work through the program to find "Choose the type of Investment you Sold"
5. Choose the "Everything Else" option in the list of investments
6. Enter the information requested about your sale (date purchased, sale amount, cost, etc)
Thank you very much. This is very helpful and I was unable to find an answer anywhere else.
I understand small profits but what's a large loss as % revenue or $ amount?
I see you can't deduct the business loss from w2 income.
Can you deduct business loss from the stock income whether short term or long term gains?
I see you can't deduct the business loss from w2 income.
Can you deduct business loss from the stock income whether short term or long term gains?
unless it is a business loss subject to the Passive Activity Loss limitations or you're not at risk, the loss should be deductible against any other income. Please provide more information.