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2021 Business Expenses with Zero Income

Forum|Forum|4 years ago
October 27, 2021
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I have been reporting Self Employed income and paying taxes for about five years, but I have zero income in 2021. Can I still file a self employed tax return and deduct my business expenses, liability and healthcare insurance? Thanks

Best answer by John-H2021

Hello Fewdevil,

Yes, you can still file a schedule C and deduct the expenses. You just need to make sure you are still running it as a business and the IRS doesn't consider it hobby income.

The IRS safe harbor rule is that if you have turned a profit in at least three of five consecutive years, the IRS will presume that you are engaged in it for profit and it is a business.

Here is a link on how the IRS classifies hobby income versus business

https://turbotax.intuit.com/tax-tips/small-business-taxes/when-the-irs-classifies-your-business-as-a-hobby/L5NClTTtK

John-H2021Answer

Hello Fewdevil,

Yes, you can still file a schedule C and deduct the expenses. You just need to make sure you are still running it as a business and the IRS doesn't consider it hobby income.

The IRS safe harbor rule is that if you have turned a profit in at least three of five consecutive years, the IRS will presume that you are engaged in it for profit and it is a business.

Here is a link on how the IRS classifies hobby income versus business

https://turbotax.intuit.com/tax-tips/small-business-taxes/when-the-irs-classifies-your-business-as-a-hobby/L5NClTTtK

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