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

Earned Income Credit

Learn more about earned income credit eligibility and get tax answers at H&R Block.

Student Loan Interest Deduction

Learn how to deduct student loan interest with H&R Block. Get information about qualified education expenses and see if a student loan tax deduction applies to you.

What Types of Tax Preparers Are There?

Tax preparers can have various designation and specialties. Learn how different types of tax preparers at H&R Block can help you in person or virtually.

What Is an Enrolled Agent or EA?

What does it mean to be an enrolled agent? Learn more about the roles and requirements of enrolled agent (EA) tax preparers at H&R Block.