How do the same losses and expenses get deducted?

[rashad530]

If I make $25,000 with my side business and have $50,000 in expenses, I lose $25,000. When I do my taxes, I can deduct the $50,000 in expenses but do I also deduct the $25,000 in losses? That seems like deducting the same thing twice. Further, if I make $100,000 in income with an unrelated 9-5 type job, do I get to deduct the losses against that income to reduce my tax burden? Thanks for any insight!

[VolvoGirl · Accepted solution]

Your loss is the Net Profit or Loss which is income minus expenses.  You only enter your income and expenses.  Turbo Tax calculates the Net Profit or Loss on Schedule C.  

Yes the 25,000 loss is deducted from your other income on the 1040.  But Some expenses, such as home office or section 179 depreciation can only be used to reduce your schedule C taxable income to zero, and not to create a loss. Excess deductions for these carry over to the next year.  And you have to answer yes to both questions about exclusive and regular use, not just one.  The area of your home office must be used regularly and exclusively for business to deduct it.

[rashad530]

Thanks!