Independent Contractor Expenses

[dpoore1]

I started a new career in 2016 as an independent contractor, but will not receive payment for the work I performed in 2016 until 2017.  In 2016, I had startup expenses and related job expenses for the income I will receive in 2017.  I am a cash basis taxpayer with wages & other taxable income for 2016.  Can I deduct my start-up expenses and contracting work expenses in 2016 even though the corresponding income will not be received and reported until 2017?  If so, I will show a loss in 2016 for my contracting work by reporting only the related job expenses. 

[Anita01 · Accepted solution]

Since the business was actually up and running in 2016, you can indeed deduct your start up and other expenses.  You are right that, as a cash basis taxpayer, there will be years when your revenue and expenses don't match up and that's not unusual.  Losses for the business will be deducted  other forms of income on your return.