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db2mh
New Member

My wife started a photography business last year. We used personal funds for startup costs such as fees, new camera equipment and mileage. Is this still deductible?

We did not reimburse ourselves for these costs and do not plan to.

1 Best answer

Accepted Solutions
DianeW
Expert Alumni

My wife started a photography business last year. We used personal funds for startup costs such as fees, new camera equipment and mileage. Is this still deductible?

Absolutely.  When you advertise as open for business and you can begin business operations you can begin to deduct expenses. 

  • If the expense was to prepare you to open for business then it's a startup cost.
  • If it was after you opened for business its an operating expense like other ordinary and necessary expense of doing business.
  • Equipment is considered purchased when it is placed in service/placed in use.
  • Startup Business Tax Tips

The IRS language states you must be engaged in the activity to produce a profit.  It is reasonable to have a loss on the overall business in the first couple of years while you gain momentum.  The rule they use is three years of profit out of every five consecutive year period. 

  • In TurboTax Home & Biz:
  • Business Tab
  • Continue
  • I'll choose what I want to work on
  • Business Income and Expense Update or Start
  • Edit > Business Profile (look to see if you indicated the business was acquired in 2016)
  • Edit as appropriate - If No, there will be not Startup Cost selection
  • Business Expenses - Startup Costs
  • Edit or Delete
  • Click the attachment to enlarge and view

View solution in original post

3 Replies
DianeW
Expert Alumni

My wife started a photography business last year. We used personal funds for startup costs such as fees, new camera equipment and mileage. Is this still deductible?

Absolutely.  When you advertise as open for business and you can begin business operations you can begin to deduct expenses. 

  • If the expense was to prepare you to open for business then it's a startup cost.
  • If it was after you opened for business its an operating expense like other ordinary and necessary expense of doing business.
  • Equipment is considered purchased when it is placed in service/placed in use.
  • Startup Business Tax Tips

The IRS language states you must be engaged in the activity to produce a profit.  It is reasonable to have a loss on the overall business in the first couple of years while you gain momentum.  The rule they use is three years of profit out of every five consecutive year period. 

  • In TurboTax Home & Biz:
  • Business Tab
  • Continue
  • I'll choose what I want to work on
  • Business Income and Expense Update or Start
  • Edit > Business Profile (look to see if you indicated the business was acquired in 2016)
  • Edit as appropriate - If No, there will be not Startup Cost selection
  • Business Expenses - Startup Costs
  • Edit or Delete
  • Click the attachment to enlarge and view
db2mh
New Member

My wife started a photography business last year. We used personal funds for startup costs such as fees, new camera equipment and mileage. Is this still deductible?

If we used a personal credit card for the equipment, but have not paid it off yet, can we still expense the depreciated value of the equipment for last year?
DianeW
Expert Alumni

My wife started a photography business last year. We used personal funds for startup costs such as fees, new camera equipment and mileage. Is this still deductible?

Yes.  A purchase by credit card is considered paid when the charge is made, not when it is paid off.  It's treated sort of like a loan.
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