Can I deduct start up costs after my first year of business?

Forum|Forum|7 years ago
June 1, 2019
1 reply
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Basically, its a business but I haven't earned income for it yet. However, I know I can deduct $5,000 my first year and the rest over 15 years (amortized) as long as it is no more than $50K. But I haven't earned income when I started the business and I want to know if I can deduct my start up costs in later years?

TurboTax Business Windows

Best answer by TaxGuyBill

The Startup Expenses (starting with the $5000) starts when the business actually starts (open and ready for business).

No, you don't have an elective choice to not claim it in the year the business opens. You do have the the option to not claim the $5000 and then amortize the entire amount over 15 years.

If you have no business income, the loss will likely be eligible to offset other income on your personal tax return.

T

TaxGuyBillAnswer

Employee

The Startup Expenses (starting with the $5000) starts when the business actually starts (open and ready for business).

No, you don't have an elective choice to not claim it in the year the business opens. You do have the the option to not claim the $5000 and then amortize the entire amount over 15 years.

If you have no business income, the loss will likely be eligible to offset other income on your personal tax return.

P

pnwcommtaxAuthor

Employee

When you say "Open and Ready" do you mean when its receiving income even if the "business" started last year in September? I understand that if I don't elect the start up costs then I could choose to amortize up to $50,000 of costs over 15 years. If I understand correctly, I could essentially deduct the $5000 as a start up cost the first year I earn income but not the first year the business opened because I have no earned income therefore, I cannot deduct costs when there isn't earned income for the business.