Solved: Is it OK to have business expenses more than business income i.e., negative business income?
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Is it OK to have business expenses more than business income i.e., negative business income?

I'm a part time consultant. My business income this year is around $6,000 (reported in 1099-MISC). I bought asset like laptop, phone and tablet this year for this business. As a result, my business expenses is around $6,500. Is it OK to claim all the business expenses since now, my net business income is negative?

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New Member

Is it OK to have business expenses more than business income i.e., negative business income?

Yes, and legally, you should claim all eligible business expenses along with all income.  In general, this does not cause problems; however, if you consistently have losses (3 years or more, for example), then the IRS could come back and consider this a hobby instead of a business and disallow the loss(es) claimed.  For hobby income (without a clear profit intent), then you can only deduct your expenses up to the income as an itemized deduction (and reduced by 2% of your adjusted gross income).

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New Member

Is it OK to have business expenses more than business income i.e., negative business income?

Yes, and legally, you should claim all eligible business expenses along with all income.  In general, this does not cause problems; however, if you consistently have losses (3 years or more, for example), then the IRS could come back and consider this a hobby instead of a business and disallow the loss(es) claimed.  For hobby income (without a clear profit intent), then you can only deduct your expenses up to the income as an itemized deduction (and reduced by 2% of your adjusted gross income).

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New Member

Is it OK to have business expenses more than business income i.e., negative business income?

If you are running the business, but have not received income for the last 2 years, can you still write-off your expenses?
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Level 15

Is it OK to have business expenses more than business income i.e., negative business income?

The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year.
<a rel="nofollow" target="_blank" href="https://www.irs.gov/uac/business-or-hobby-answer-has-implications-for-deductions">https://www.irs.go...>
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