How to deduct losses from LLC

Forum|Forum|4 years ago
March 23, 2022
2 replies
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Hi,

I have been a salaried employee of a company. I have created an LLC last year and I had bought some office space through this LLC that I rented out. But, overall, I ended up in negative last year for the LLC (let's say $10k) bc painting/carpeting/etc was more than I got on rent. Can I deduct that loss from taxes, kind of from my salary? That is, if I had a salary of $60k for the year and the loss of $10k for the LLC, would I pay taxes just for $50k?

I try to do the taxes by myself bc it's pretty expensive with an accountant plus I still need what to tell the accountant otherwise he wont file the taxes right/miss deductions/etc.

Tks a lot,

Not A Product Question

AliciaP1

Level 13

Yes, in a roundabout way that is what will happen. You will need to file a Schedule C for your LLC within your tax return. If you choose to use TurboTax to file your taxes, the software will walk you through an interview to enter all your information correctly.

Take a look at How do I report income from self-employment? and What self-employed expenses can I deduct? to get some more information.

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Mike9241

Level 15

I had bought some office space through this LLC that I rented out.

this normally has to be reported on schedule E not schedule C but we do not have a full picture of what took place in 2021

you need to report the rental activity separate from an activity in which you sold products or services. if the schedule C reports net income that's subject to self-employment taxes. any rental activity loss can not be used to offset this income. in addition, if the rental activity produced a loss, it may not be deductible due to passive activity rules. if you are confused about this, you need to seek out a pro so your reporting is proper. start out wrong this year and ensuioing years are likely to be wrong. you may want to look yo Turbotax live which for an additional fee will prepare your returns.

donlelelAuthor

Level 2

For the LLC (owned 50-50 with my wife)

- we gave 1099 to the contractors (painting/carpeting/etc) and filed correspondingly with IRS for that

- we sent these forms to IRS: 1065 (which includes separately also schedules B-1, K-1, besides schedule B, K, L, M-1, M-2 inside the 1065 form), 8825, 4562

So my family income from salaries cannot be offset (this year, at least) with the losses from the LLC. What about next year (when I'll file for this year, 2022) - should I be able to deduct (all or some) of the 2021 losses from the LLC 2022 income (which income I hope to have next year)?

I do have the desktop version of Home & Business TT but it seems it's not really good for my case, probably I should have bought two TT, one for business only and one for home. This year, at least the business part, I filed manually, by post.

It was impossible also to get any help from IRS. I guess they're busy auditing.

Tks a lot,

GeorgeM777

Level 11

Yes, if you cannot use your partnership losses in a given year, then they will carryover to the following year. You can learn more about partnership losses by clicking on this link: New Limits on Partners' shares of partnership losses FAQs.

@donlelel

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