Get Answers To Your Tax Questions
H&R Block Tax Professionals relentlessly focus on making sure you profit from every deduction and credit available.
Finding answers to your tax questions is now less taxing.
Can I claim start-up expenses and no income for my own business?
Yes, you can claim a portion of the start-up expenses in the first year even if you don't have income from your business.
You can deduct up to $5,000 of your business start-up costs:
You must reduce the $5,000 cap dollar-for-dollar by the amount of start-up costs in excess of $50,000 .
Ex: If start-up costs are $51,000, the cap is reduced to $4,000. If start-up costs are $55,000 or more, the $5,000 deduction is completely phased out.
You can amortize the remaining start-up costs over 180 months, starting with the month business begins. You might be able to treat start-up costs as nondeductible capitalized costs. You’ll do this if you don’t deduct them the year:
You can't recover these costs until the business is dissolved.
Start-up costs are usually costs incurred before the business opens. (Ex: advertising costs for the opening of a business). They are the costs incurred in connection with:
Businesses don’t have to make a formal election to deduct start-up costs incurred or paid after Sept. 8, 2008. Instead, businesses make their election in the first year of business by either:
Once made, you can change the election only with IRS consent.