I have a small in-home bakery, sole-proprietor. 2023 will be my 6th year showing a loss. I worked 100% of the time but only had $5150 in income this year. With all my deductions, I show a loss of $-17,332. Cost of supplies and ingredients ridiculously increased, plus we relocated. I only claimed 1/3 of my moving truck expenses.
Since it is my 6th year with a loss will this raise red flags triggering an audit? 2023 was probably my worst loss. My audit risk was medium but I am wandering if I should amend my taxes and not take so many deductions.
Do I have anything to be concerned about as far as an audit?
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You need to sit down with a tax professional to go over your situation. Likely, sooner or later reporting losses year after year is going to trigger an audit. Then the IRS will want some form of evidence that you can turn the business around
see this from Turbotax
you say you work 100% of the time yet revenue was only about $5K. that's not enough to support anyone so where is the money coming from to support yourself and to fund the losses. If audited, the IRS is going to want to know. Something is not adding up.
You need to sit down with a tax professional to go over your situation. Likely, sooner or later reporting losses year after year is going to trigger an audit. Then the IRS will want some form of evidence that you can turn the business around
see this from Turbotax
you say you work 100% of the time yet revenue was only about $5K. that's not enough to support anyone so where is the money coming from to support yourself and to fund the losses. If audited, the IRS is going to want to know. Something is not adding up.
My baking income is additional to my investment income which totals over $76,000 annually.
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