bad debt write off

[AmyC]

From Topic No. 453, Bad Debt Deduction:

If someone owes you money that you can't collect, you may have a bad debt. For a discussion of what constitutes a valid debt, refer to Publication 550, Investment Income and Expenses and Publication 334, Tax Guide for Small Business (For Individuals Who Use Schedule C). Generally, to deduct a bad debt, you must have previously included the amount in your income or loaned out your cash. If you're a cash method taxpayer (most individuals are), you generally can't take a bad debt deduction for unpaid salaries, wages, rents, fees, interests, dividends, and similar items of taxable income. For a bad debt, you must show that at the time of the transaction you intended to make a loan and not a gift.

Paying someone to install a fence is not a loan. Here are some helpful tips of what to do when a contractor doesn't finish the job.

@Swishman4619 

[jayjay3cmu]

Where do I claim loss for unpaid consulting fees?

[jayjay3cmu]

My customer did not pay me in full on my 1099 NEC. I have no expectation of payment and would like to claim the loss.

[jayjay3cmu]

I am using Home and Business desktop version and wish to claim loss on uncollectable consulting fees which were not paid on my 1099 NEC. Thanks!

[LeticiaF1]

Per IRS Topic no. 453 regarding Bad debt deduction, if you're a cash method taxpayer (most individuals are), you generally can't take a bad debt deduction for unpaid fees. If you received a Form 1099-NEC showing a larger amount than what you were paid, you could contact the company or individual that issued it and have them correct it.  

@jayjay3cmu 

[jimbolight]

made personal loan to business an now is a write off where to enter in turbo tax??

[Vanessa A]

If you made a personal loan that is now completely worthless and you made all attempts to collect, then you would write it off as a non business bad debt.

To do so select the following:

1. Deductions and Credits
2. Non Business Bad Debt under Other Deductions and Credits
3. Walk through the steps and answer the questions on the debt.

How to Report Non-Business Bad Debt on a Tax Return