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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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