I do consulting; work done in 2016 was paid in 2017. I incurred 2016 expenses but will not have a 1099 until next year. Is it ok to claim a loss with no income or 1099?

[SeanE1 · Accepted solution]

Most individual taxpayers are on the cash basis instead of the accrual basis and therefore include only income that is actually received in a given tax year.  So for 2016, if you received no income, you would create your Schedule C showing all of your expenses with no income.  Don't worry, most businesses either show a loss or breakeven during the first few years of operation. For 2017, things will level out and you will show both income and expenses.