Question

I started by own business in 2016 and I have a question about taking a business loss deduction. Since my start-up costs were more than my income would I qualify for a business loss tax deduction?

Answer

You should qualify for a business loss deduction because you can deduct a limited amount of business expenses including:

  • Start-up costs
  • Expenses for creating an active trade or business
  • Expenses for investigating the creation or acquisition of an active trade or business

You can take these types of business loss tax deductions in the year your business was started. You can deduct up to$5,000 in expenses for your business. You’ll need to reduce the $5,000 cap dollar-for-dollar by the amount the start-up costs are more than $50,000.

You can amortize the remaining start-up costs over 180 months starting with the month your business begins.

Related Topics

Related Resources

Head Of Household EIC

Learn more about filing head of household and claiming the earned income tax credit with advice from the tax experts at H&R Block.

Married Filing Separately & Mortgage Interest

Learn more about claiming mortgage interest if you and your spouse are filing separately with advice from the tax experts at H&R Block.

EIC Separated from Spouse

Learn whether you can claim the earned income tax credit if you are separated from your spouse with advice from the tax experts at H&R Block.

How to Get Tax Breaks for Volunteer Work

Learn more about tax breaks for volunteering with the experts at H&R Block. The rules may surprise you.