Yes, you can still claim business (Mary Kay) related expenses, even though you had no revenue.
You can deduct expenses as long as you can prove that
you opened or were in business in the year expenses were incurred. To be
deductible, a business expense must be both ordinary and necessary.
Also, the IRS expects that if you start a business, you intend to make money at it. If you don't, your business is likely to be a hobby, if which case you can only claim expenses to the extent of your hobby income. To determine if your business is a hobby, the IRS looks at numerous factors, including the following:
- Do you put in the necessary time and effort to turn a profit?
- Have you made a profit in this activity in the past, or can you expect to make one in the future?
- Do you have the necessary knowledge to succeed in this field?
- Do you depend on income from this activity?
- Are your losses beyond your control?
As a Business, you are considered to be
self-employed. You report both income (if any) and expenses on Schedule
C/Business Income & Expenses.
Also, take care when reporting your "inventory" under what is called "Cost of Goods Sold" and account for how much of your purchases during the year was "withdrawn for personal use".
TurboTax will guide you step by step
through the process.
- Type
in "business expenses" in the
search box in the right hand corner of your screen
- Click jump to business expenses.
Note: Based on your expenses, you may have to upgrade to a higher version of
TurboTax.
