Net Income Showing Zero (0) Despite Loss On Schedule C

Forum|Forum|3 months ago
April 13, 2026
1 reply
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My Net Income from Schedule C is showing zero despite my expenses exceeding income. Also Schedule 1 not showing. As I entered my expenses, it kept reducing Federal tax due until it got to $790 and stopped. Additional expenses entered after that did not reduce the tax and did not move the needle. I have reported losses for the past 3 years in large part because I received some of my contract income on W2 instead of 1099, but continued to run my business 4 days per week while incurring
Schedule 1 figures showed up on 1040 in previous years. What could I have answered differently and how can I get TurboTax to go over all the questions again?

MaryK4

Level 15

The reason your net income is showing as zero despite your losses is likely due to how a specific question regarding "At-Risk" limitations was answered, or because of restrictions on Home Office deductions. When these settings are applied, TurboTax caps your expenses at your income level, preventing a negative number (loss) from flowing to your 1040.

In the business profile section, if you accidentally checked a box saying "Some investment is NOT at risk," the IRS (and TurboTax) will not allow you to claim a loss. This usually refers to nonrecourse loans or protected investments. Since you are using your own money/effort, you should likely be marked as "All investment is at risk" to allow the loss.

To check this, click Edit next to your business name. Look for the "Uncommon Situations" or "Special Situations" section at the bottom of the business summary. Make sure you have selected "All investment is at risk".

Expenses for a home office can only reduce your business income to zero; they cannot create or increase a loss. If the rest of your business expenses already brought you to zero, any additional home office costs will simply be carried over to next year rather than reducing your current tax bill.

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