Write off expenses

Forum|Forum|7 years ago
December 8, 2018
1 reply
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Is there a minimum self employment income (1099) to write off expenses?

eg if I earn $120 in a year can I still write off more than that in expenses?

Carl11_2

There is no such thing as a minimum. If you were "open for business" for even one day in the tax year, then you are required to file a tax return. Even if that business has zero income and zero expenses. Also, you are required to claim all business expenses weather you want to or not. Even if your expenses exceed your business income, you must still report all of them.

Basically, once your deductible business expenses get your taxable business income to zero, that's it. Any remaining expenses are just carried forward to the next year where they are deducted, if the business has the income to deduct them from. In some cases, the excess business expenses can be claimed against other ordinary income (such as W-2 income) thus further reducing your taxable income for the tax year.

A

Anonymous

Gotcha, thanks!

Under what circumstances can the excess expenses be claimed under my normal W-2 income?

Carl11_2

It's more "situation" than "circumstance" and I'm not going to list all the variables here. But for a sole proprietor or single member LLC reported on SCH C as a part of your personal 1040 tax return, if the excess can be deducted from other ordinary income, then the program will "know" and make it happen. For a SCH C business, there are less situations where it can't be deducted from other ordinary income, and more situations where it can be deducted from other ordinary income.

For example, if depreciation on an asset in a year will be more than your business income in that tax year, that can't be deducted from other ordinary income. It's carried forward. But if something like the business expense of utilities (gas, electric, water, etc.) exceeds your business income, then that can be (and will be by the program) deducted from other ordinary income.