No income from my self-employment. Do not own a business. Can I deduct self-employment expense?

[sherry-y-rong]

I have w2 income from job. Then I quit and become self-employed. I want to start a self-driving car technology consulting business. 

The business is not registered or incorporated because I wasn't expecting to get any income within the tax year. Obviously, I did not receive 1099 misc or 1099 k. 

But in order to prepare for my own business, I spend a lot of money on electronic hardware, supplies, including a testing car. That's about $20,000 expense. 

Can I use schedule C to deduct this expense from my w2 income?

Do I have to register a business to be considered as sole proprietor? Am I qualified as a freelancer or independent contractor? 

If I can deduct it, what business name do I enter on schedule C.

[Molly_K]

It sounds like your business is not officially open, which would mean you claim these in a future tax year when actively seeking profits. Therefore, you would not file a schedule C for 2017. To answer your question- when you do file a schedule C at future date, a business name is not required, you would just provide a brief description of the type of work. Depending on where you live, you may be required to apply for a business license as well. 

Be sure to maintain records of these expenditures since they may qualify as deductible "start up costs" in a following tax year when you are officially open for business. Start up costs come from investigating the creation or acquisition of an active trade or business. They are paid before the business opens its door.

How these expenses are handled:

Up to $5,000 of startup costs paid or incurred can be deducted if the total startup costs incurred don't exceed $50,000. An election can be made to amortize costs in excess of $5,000 over a period of 15 years.