@Spires34 wrote:
@VolvoGirl its a formed LLC and just myself. I didn't want to mention this part because it takes away from the main question, but I also made side money as a 1099 contractor so these expenses does in fact help lower taxation in that sense. (since LLC is pass-thru).
But that last part you said, yes that is my question. everyone says it "carries over" so what does that mean? Does turbo tax trash how much additional expenses went past that zero income, and save it for next year? For example do I put a post-it note on my desk and hold it for next year with that number on it? I know not literally but just trying to hammer down my question here. not sure how carry over works.
No, you don't put your expenses on a post-it note. You enter all income and expenses when they are paid.
If this is a single member LLC treated as a disregarded entity, reported on schedule C, and you have a loss for the year (expenses exceed your income), this loss offsets your other income for the year. If the loss is greater than all your other income, you have a "net operating loss" which is carried back or forward, depending on certain rules.
If you have two separate businesses, you will file two schedule Cs, one listing this LLC, and the other listing your other side gig. If you made $50,000 with the other side gig and lost $10,000 with the LLC, then you have $40,000 of net taxable income for the year. You can't segregate your losses (pay income tax on $50,000 this year and carry the $10,000 loss forward.)
Because both your businesses are "disregarded entities", everything passes to you as the taxpayer, and everything is combined on your single form 1040 (with two schedule Cs but only one schedule SE). Your losses from one business offset your income from the other business. You can't segregate your losses.
