MichaelMc
New Member

Business & farm

Yes, you can claim your business expenses, but not on your 2018 tax return. The general rule is that business startup expenses are deductible in the year when active trade or business begins. Since you had no income-generating events in 2018, your startup expenses will become deductible in 2019, when your new business begins to generate revenue. Please see IRS Pub. 535 Business Expenses for more information.

Also, you must distinguish between startup expenses (licenses, permits, legal fees, pre-opening advertising, etc.) and the amount spent on business assets (machines, equipment, vehicles, etc.). These assets are depreciable over their useful life, although in many cases can be expensed in the first year put in service under Section 179 of the Internal Revenue Code.

Note: The Tax Cuts and Jobs Act of 2017 increased the annual dollar limit on Section 179 deductions. For tax years beginning in 2018, the maximum section 179 expense deduction is $1,000,000. This limit is reduced by the amount by which the cost of section 179 property placed in service during the tax year exceeds $2,500,000.

When you are ready to file your 2019 tax return, TurboTax Home & Business (or TurboTax Business if you have incorporated or created a partnership) will guide you through the steps to enter information about these assets and make the correct choices to expense or depreciate their value.