@fujipro400 wrote:
Hi! Thank you for your reply. The link you sent is broken, but I'm wondering if you could send another. Also, the ad-revenue my videos next to nothing, in fact when I factor in the materials for making images I'm actually losing money. I enjoy making the videos though and because I technically make revenue I wondered about the financial benefits of filing it as a business. As I said in my earlier post, my intention is to eventually make it profitable so I don't think I'd be doing anything illegal, but alas I'm here to get a better understanding. Would those losses reduce the amount of money I get back on my return?
I feel like there is some understanding missing here.
Suppose you have $50,000 of taxable wages. You add a business with $5000 of losses. Those two combine so that you only have $45,000 of taxable income to pay taxes on. Your business losses reduce the tax you owe on your other income.
If you are operating the business in a businesslike manner with a true profit motive, you can deduct your losses against your other regular income. Whenever you finally turn a profit, you start paying income tax on the profit.
Claiming a business loss would not reduce your tax refund, it would reduce the tax you owe and probably increase your refund.
