Realtor deductions taken to offset wages the last two years with no income the third year. Unsure best approach for tax reporting

[pkelly]

My wife has been a realtor for 3 years on the side and is also an amazing stay at home mom for our previously four and now five children. She worked really hard when she had the time for the first two years getting things established and in 2023 we had another daughter (very unexpected but of course very welcome) so she wasn't able to devote much time and didn't have any sales/wages. She did end up moving to a new broker which has been much better but just didn't have the time to devote with the new baby. I'm pretty much finished with our taxes now but am not sure if I need to claim deductions this year again since she has no wages it would be the third year in a row of not making a profit which I've heard could trigger the IRS to determine it is a hobby and not a job. We claimed deductions for travel and a portion of her car, as well as some meal expenses and tolls that she used when traveling for clients but I wasn't sure if it's worse to not claim any of the items we claimed last year or to have a third year in a row of losses. She never made a ton but it did help with some additional money for the family. Any advice/ suggestions would be greatly appreciated.

[AmeliesUncle · Accepted solution]

You need to look at the "nine factors" to determine if it is a hobby or a business.  If you determine it is a business, claim the deductions.

https://www.journalofaccountancy.com/issues/2013/oct/20138370.html