Business expenses deduction with no income
I had a W2 job for the first half of 2024 and my W-2 income was $100k. I left my job and started working as a self-employed contractor in December, 2024. I will receive the payment for my December's work in January, 2025. So, I have no self-employed income for 2024, but have some business expenses incurred in December 2024. Can I claim business expenses on my 2024 tax return, even if the business produced no income? Since the business is at $0 of income, but my W-2 income is $100k, I am hoping this loss will reduce my W-2 taxable income.
Best Answer
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The IRS does allow for businesses to claim losses on any given tax return. Typically, starting a business can report a loss showing all business expenses in the first year. The IRS allows up to three years of business losses before determining if your activity could be a hobby, where losses are not deductible. Please read through this article for more reference.
Business losses will reduce your Wages as part of your Adjusted Gross Income on your tax return.
Answers
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AGREE 👍