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Level 7

Write off expenses

Is there a minimum self employment income (1099) to write off expenses?

eg if I earn $120 in a year can I still write off more than that in expenses?
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Accepted Solutions
Level 20

Write off expenses

It's more "situation" than "circumstance" and I'm not going to list all the variables here. But for a sole proprietor or single member LLC reported on SCH C as a part of your personal 1040 tax return, if the excess can be deducted from other ordinary income, then the program will "know" and make it happen. For a SCH C business, there are less situations where it can't be deducted from other ordinary income, and more situations where it can be deducted from other ordinary income.

For example, if depreciation on an asset in a year will be more than your business income in that tax year, that can't be deducted from other ordinary income. It's carried forward. But if something like the business expense of utilities (gas, electric, water, etc.) exceeds your business income, then that can be (and will be by the program) deducted from other ordinary income.

7 Replies
Level 20

Write off expenses

There is no such thing as a minimum. If you were "open for business" for even one day in the tax year, then you are required to file a tax return. Even if that business has zero income and zero expenses. Also, you are required to claim all business expenses weather you want to or not. Even if your expenses exceed your business income, you must still report all of them.

Basically, once your deductible business expenses get your taxable business income to zero, that's it. Any remaining expenses are just carried forward to the next year where they are deducted, if the business has the income to deduct them from. In some cases, the excess business expenses can be claimed against other ordinary income (such as W-2 income) thus further reducing your taxable income for the tax year.

Level 7

Write off expenses

Gotcha, thanks!

Under what circumstances can the excess expenses be claimed under my normal W-2 income?
Level 20

Write off expenses

It's more "situation" than "circumstance" and I'm not going to list all the variables here. But for a sole proprietor or single member LLC reported on SCH C as a part of your personal 1040 tax return, if the excess can be deducted from other ordinary income, then the program will "know" and make it happen. For a SCH C business, there are less situations where it can't be deducted from other ordinary income, and more situations where it can be deducted from other ordinary income.

For example, if depreciation on an asset in a year will be more than your business income in that tax year, that can't be deducted from other ordinary income. It's carried forward. But if something like the business expense of utilities (gas, electric, water, etc.) exceeds your business income, then that can be (and will be by the program) deducted from other ordinary income.

Level 7

Write off expenses


Ok, thanks, I really appreciate the help.

I get paid a little for working in fishing social media and my expenses are fishing gear. It seems like that mine might be eligible for deduction from my usual income. I’ll try it in the web app and see what happens. Thanks again.
Level 20

Write off expenses

I'm wondering if you mis-stated something. How does one "fish" in social media, and what kind of "fishing gear" do you need for that? Perhaps you're referring to electronic "phishing", which in many cases is an illegal activity in the technology industry.

Level 7

Write off expenses

Perhaps I did.

I post fishing (eg bass, trout) stuff on websites and social media and earn a little money from that.
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Level 6

Write off expenses

Let say I teach art workshops and make $500 -1000 in income per year.  I've written off business expenses for the past 3 years which have exceeded my income modestly each year.  I work at creating these workshops all year, so I'm a very active participant in the process. I just haven't attracted enough workshop attendees yet to turn a profit.    Can I continue to write off expenses that exceed my income?  My intention is to make money of course, but so far that hasn't happened.  I don't want to get in trouble.  My husband has a regular job.  This is what I do full time on the side.  I'm a self-proprietor doing a schedule c.  I read something about having to show a profit 3 years out of 5? I'm not sure if that is really true, but I want to make sure.