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rkompa
New Member

Can self employed bisiness expenses be taken with no income?

 
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Melaine
New Member

Can self employed bisiness expenses be taken with no income?

Yes, while you may not have made any profits, if since you have expenses, you may want to file a Schedule C to claim them.  If you do not claim your expense in the year you pay them, you may not be able to deduct them in the future when you do have income.  Please read the following article to guide your decision; IRS Publication 334  It will provide you with advice on filing if you have any expenses, such as the cost of a business license. 

Also, if you have another source of income that could off-set the loss in your business  so that you pay your tax at a lower rate.  Example; you receive a W2 from your job for $65,000 with no other income or adjusted gross income deductions, $65,000 would be your Adjusted Gross Income. However, if you had a business loss of $3,000 then your Adjusted Gross Income would be $62,000 that will lead to a reduction in taxable income.  





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12 Replies
Melaine
New Member

Can self employed bisiness expenses be taken with no income?

Yes, while you may not have made any profits, if since you have expenses, you may want to file a Schedule C to claim them.  If you do not claim your expense in the year you pay them, you may not be able to deduct them in the future when you do have income.  Please read the following article to guide your decision; IRS Publication 334  It will provide you with advice on filing if you have any expenses, such as the cost of a business license. 

Also, if you have another source of income that could off-set the loss in your business  so that you pay your tax at a lower rate.  Example; you receive a W2 from your job for $65,000 with no other income or adjusted gross income deductions, $65,000 would be your Adjusted Gross Income. However, if you had a business loss of $3,000 then your Adjusted Gross Income would be $62,000 that will lead to a reduction in taxable income.  





142429
New Member

Can self employed bisiness expenses be taken with no income?

ceci 

wyzzkid101
New Member

Can self employed bisiness expenses be taken with no income?

Are there any exceptions to reducing your AGI from W2 income with business expenses? For example, if I have $62,000 of W2 income, and I just started the business and have not made any income by the end of the year, can I deduct the purchase of a car of $22,000 to make total AGI $40,000?

Critter-3
Level 15

Can self employed bisiness expenses be taken with no income?

A 179 deduction can only be taken if you have positive earned income  and if you take the bonus depreciation deduction with no income on the Sch C then put your duck in a row since you are inviting an audit... be prepared to defend your choice. 

wyzzkid101
New Member

Can self employed bisiness expenses be taken with no income?

Does the income amount matter? Let’s say income was less than $500. 

Critter-3
Level 15

Can self employed bisiness expenses be taken with no income?

If the income is $500 then the 179 deduction is limited to $500.  I really think you should seek guidance from a local tax pro who can educate you in the options available to you and the consequences of taking the 179 deduction and bonus depreciation. 

VolvoGirl
Level 15

Can self employed bisiness expenses be taken with no income?

Here is some IRS reading material……

 

IRS information on Self Employment

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

 

Pulication 334, Tax Guide for Small Business

http://www.irs.gov/pub/irs-pdf/p334.pdf

 

Publication 535 Business Expenses

http://www.irs.gov/pub/irs-pdf/p535.pdf

Opus 17
Level 15

Can self employed bisiness expenses be taken with no income?

If you start a business and have only startup expenses and no income, you don't report it on your tax return at all.  Your report your startup expenses in the year you first have operating income.  Your startup expenses are then either expensed, or amortized over 15 years, or both, depending on the amount and nature of the expense.  

 

So no, you can't purchase a business vehicle and use it to reduce your non-business income if you don't have any other business income. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
shkcpa41
New Member

Can self employed bisiness expenses be taken with no income?

What about professional training/education expenses incurred through a Master's program to better prepare yourself to open a private medical related practice in 1-2 years down the road?

SweetieJean
Level 15

Can self employed bisiness expenses be taken with no income?

Expenses to enter a new profession are not deductible.

You might be able to claim the Lifetime Learning Credit, though.

xmasbaby0
Level 15

Can self employed bisiness expenses be taken with no income?

 

@shkcpa41 

 

https://ttlc.intuit.com/community/credits-and-deductions/help/what-expenses-qualify-for-the-lifetime...

 

https://ttlc.intuit.com/questions/3262984-who-is-eligible-for-the-lifetime-learning-credit

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Opus 17
Level 15

Can self employed bisiness expenses be taken with no income?


@shkcpa41 wrote:

What about professional training/education expenses incurred through a Master's program to better prepare yourself to open a private medical related practice in 1-2 years down the road?


Education and training to enter a new profession are not deductible, either as personal expenses or as start-up expenses of a new business.  Deductible business expenses are "ordinary and necessary" expenses of running the business, but do not include training to be able to start a new business.  Other startup costs (buying equipment and so on) might be deductible start up costs according to the rules for treating start up costs.

 

Personal education expenses might be eligible for education tax credits.  

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

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