What if I show a Loss

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What If I Show A Loss?

Generally, a loss on your Schedule C is deductible against your other income shown on Form 1040.

If your loss exceeds the other income, this may or may not create a Net Operating Loss which you can carry back to a previous year (or elect to carry forward directly) to get a refund of taxes paid. See Form 1045, Schedule A for info on net operating losses.

Caution: Before you declare a loss, be sure you have double checked;

You did not cause or increase the loss through a deduction for business use of your home (Form 8829),
If the loss was caused/increased by a Sec. 179 deduction on Form 4562, the excess is not greater than any other earned income (including wages) on your return, and
You are fully "at risk" for the loss in your business.

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IRS Circular 230 Disclaimer: To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer under the Internal Revenue Code, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein.