You have started a business in 2016. Even if you have not yet made any sales in 2016, you can deduct start-up costs in the year you started your business.
Business start-up and organizational costs are generally
capital expenditures. However, you can elect to deduct up to $5,000 of business
start-up and $5,000 of organizational costs paid or incurred after October 22,
2004. The $5,000 deduction is reduced by the amount your total start-up or
organizational costs exceed $50,000. Any remaining costs must be amortized.
Start-up costs include any amounts paid or incurred in
connection with creating an active trade or business or investigating the
creation or acquisition of an active trade or business. Organizational costs include the costs of creating a
corporation.
Claiming your start-up costs will result in a loss, which helps reduce your taxable income.
In order to claim these start-up costs on your tax return, you'll need to use TurboTax Self-Employed (online version) or TurboTax CD/Download (desktop version).
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