mft1180
New Member

Business Start Up Expenses

My wife and I did not make a lot money this year. I am a Realtor and she is self employed. Her business did not make any money nor did she draw any compensation. We are receiving EIC. When I start to add her business start up fees, our federal return gets worse. I'm going to owe money if I continue to add expenses. Do I have to file start up expenses this year? Or can I wait until I'm more profitable?

Business & farm

Yes, you are required to claim the all expenses this year.  However, you DO have the option to NOT use the $5000 of immediate startup expenses, but amortize the entire amount over 15 years instead.  That sounds like it may be a good option for you.
mft1180
New Member

Business & farm

Thanks, Bill. I only about $3900 in start up expenses. So I'm guessing I need to claim that. But if that drives up the cost of what I owe the federal government, maybe its not worth claiming it. Can I not claim anything?

Business & farm

As said before, yes, you are required to claim it, BUT you have the option to amortize the entire $3900 over 15 years.  That would only give you a very small deduction for this year, and the rest would be spread out over the next 14-15 years.
mft1180
New Member

Business & farm

Got it, Bill. Thanks for you time and assistance.
GretchenG
Intuit Alumni

Business & farm

I hope this helps: Start-Up Expenses are reported in aggregate - one amount equal to the total of all expenses incurred. For active business activities, these costs are entered either under Assets/Depreciation or under Business Expensesdepending...

Per IRS Pub 535 Business Start-Up and Organizational Costs: "Business start-up and organizational costs are generally capital expenditures. However, you can elect to deduct up to $5,000 of business start-up and $5,000 of organizational costs paid or incurred after October 22, 2004. The $5,000 deduction is reduced by the amount your total start-up or organizational costs exceed $50,000. Any remaining costs must be amortized."

In TurboTax, as long as your start-up expenses are less than $5000, you can add them as Business Expenses

In TurboTax, if you have more than $5000 in start-up costs, the remainder is entered under Business Assets as Intangible Asset, for amortization. Per the IRS, the recovery period would be 180 months or 15 years. 

Please see this IRS link for more information: https://www.irs.gov/publications/p535/ch08.html#en_US_2016_publink1000208939