Business loss reducing W-2 wages?

Forum|Forum|1 year ago
March 1, 2025
1 reply
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I have a full time W-2 job, plus I have a business as an author.

My expenses in my author business exceed the author income. I thought the losses would be limited to the author income (net 0 tax impact) and the excess loss would be an NOL, but TurboTax is deducting it thru Sch. C line 10 into 1040 Line 8.

Is that correct??

TurboTax Home & Biz Windows

Bsch4477

Level 15

TurboTax is handling it correctly. You don’t deal with the net loss carryover until your carryover after subtracting the business loss from other income exceeds $300,000.

mikemann101Author

Level 2

Thanks!

Do I need to worry about the IRS looking at the author income and calling it Hobby Income (vs business)? I expect to eventually come out with a profit on the business, but starting out I have had more expenses than income.

Bsch4477

Level 15

If an activity generates a profit in at least three out of five consecutive years, it is presumed to be engaged in for profit. However, if an activity fails to meet this test, it may be considered a hobby, and expenses related to that activity may not be deductible