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;

  1. You did not cause or increase the loss through a deduction for business use of your home (Form 8829),
  2. 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
  3. You are fully "at risk" for the loss in your business.

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