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If I had a Home Based Business and generated no income but had many expenses, can I file taxes? My expenses consisted of travel, dinner meetings with potential clients, etc. Can I file these deductions/credits even though I did not generate any income?

JohnFx
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Byron Gillespie
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    In what country is the business? – mhoran_psprep Jan 24 '15 at 13:03
  • By "file taxes" I assume you mean "take a tax deduction". You should always file a tax return. – Rocky Jan 24 '15 at 16:22
  • @Rocky not necessarily. In the US - there's an income threshold below which you're not required to file a tax return. – littleadv Jan 24 '15 at 21:53
  • By "you" I meant OP, not everyone. – Rocky Jan 25 '15 at 01:11
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    How do you know what the OP has to do or should do? You don't even know what country he's from. – littleadv Jan 25 '15 at 01:17
  • If this is the US, are you filing it as a separate business entity, or as a Schedule C? My understanding on the Schedule C is that you can file it for a couple of years at a loss, and then if you can't bring it to profit, it's considered a 'hobby' and not a business. (based on advice I was given in a similar situation ~20 years ago ... I'm not putting this as an official answer as it might have changed since then). – Joe Jan 27 '15 at 01:28

2 Answers2

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Assuming the US, if a human assessor audited you, could you show a future profit motive or will they conclude you are expensing a hobby?

If you answer yes, you are likely to only be deducting limited expenses this year, carrying forward losses to your profitable years. See the examples in pub 535: http://www.irs.gov/publications/p535/ch01.html#en_US_2014_publink1000208633

user662852
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In the US, you can only take a tax deduction on expenses to the extent that they offset income. For an S corp or LLC, if the business had no income, there's no deduction to take. If you have a sole proprietorship, these expenses can offset other income.

You can also carry-forward net operating losses to future years when you have more income.

See the article How to Carry Over Business Expenses

Rocky
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