Hal_Al
Level 15

Deductions & credits

It’s not clear whether you were operating an active business or spending money (start up expenses)  to get ready to open a business.

Operating expenses are deductible, even if you have no sales income. Start up costs are not deductible. Start up costs are amortized and the deduction spread out over a 15 year period*.

 

Educational expenses to improve your current job skills are deductible. But learning a new job is not, not even as start up costs.  The other items, you mentioned, domain,  outside applications would be deductible.

If you have a business loss, there will be no tax  on the business activity, even if you had revenue (gross receipts). A business loss would be deductible against any other income you have.  So, it can reduce any tax liability you have. If you have a Net Operating Loss (NOL) on your tax return, the NOL will carry forward to the next year and can be deducted against next year’s income.  There is no direct refund or refundable credit on this year’s tax return, for a business loss (“I am looking to receive the benefit of what I have spent”). 

 

Where to enter your expenses?  Follow the TurboTax (TT) interview. There’s something like 18 expense categories on Schedule C (Sole Proprietorship). If your expense doesn’t fit in a category (education won’t), enter as “other expenses”. TT will allow you to type a description.

 

Re: Sales tax; see https://turbotax.intuit.com/tax-tips/self-employment-taxes/sales-tax-101-for-online-sellers/L4uTQCaI....

 

*See https://ttlc.intuit.com/community/investments-and-rental-properties/discussion/do-i-have-to-amortize...

For an exception to deducting start up costs.