Business Q&A: Does my business have to make any money for me to take tax deductions?

Business Tax

business tax question by Starman: Does my business have to make any money for me to take tax deductions?
I set up a business that has brought in zero amount of money. I have invested money in materials to do this business and I am wondering if I can take business tax deductions when no income can be reported from it.

business tax best answer:

Answer by SmartA$ $
Yes, you can deduct business losses from your personal income. Typically speaking, the IRS will allow you about 3 years of losses after start up before they get suspicious and start auditing you. However, if something doesn’t add up, they could audit you at any time. Just make sure you have all the proper documentation so that if you are audited, you can show that your deductions are legitamate.

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One thought on “Business Q&A: Does my business have to make any money for me to take tax deductions?”

  1. If you are open for business, then you most likely can deduct at least some of the expenses against other income if you have any. If you don’t have other taxable income, it won’t do you any good.

    If you have just bought the materials but haven’t opened for business yet, you have to wait until you are open for business.

    If this is something that the IRS might look at as a hobby, you can’t deduct expenses over the amount of income.

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