If you have or will have any income from this invention, you can enter it as a business in TurboTax. For this you will need TurboTax Online Self Employment or TurboTax Desktop Home and Business. Even if you had no income in 2017, if you were actively marketing your invention, you can deduct your costs. You may elect to deduct up to $5,000 of start-up costs in the year your business begins operations. R&D expenditures are also deductible in the first year of business. Deductions are taken in the year the money is spent, so you can't save these deductions for later unless you capitalize them and depreciate the assets.
R&D expenditures generally include all expenditures incident to the development or improvement of a product. R&D expenditures include the expenditures of obtaining a patent, such as attorney's fees expended in making and perfecting a patent application.
Product
The term "product" includes any the following:
- Formula
- Invention
- Patent
- Pilot Model
- Process
- Technique
- Similar Property
Expenditures Not Included
R&D expenditures do not include expenditures for any of the following:
- Quality control testing
- Advertising or promotions
- Consumer surveys
- Efficiency surveys
- Management studies
- Research in connection with literary, historical, or similar projects
- The acquisition of another's patent, model, production, or process
When And How To Choose
Generally, you can only make the choice to deduct R&D expenditures in the first year you incur such expenditures.
You choose to deduct R&D expenditures, rather than capitalizing them, by deducting them on your tax return for the year you first have R&D expenditures.
If you fail to choose the method for the first taxable year in which you incur such expenditures, you cannot do so in the subsequent taxable years unless you obtain the consent of the Commissioner.
