We invested $20,000 in a business startup in May of 2018. It failed in October of 2019. How do we claim this loss on our 2019 taxes?

You deduct this as an investment loss and enter it in the investment section of TurboTax.

You can deduct the investment in the tax year it becomes completely worthless. This normally happens when the corporation files for bankruptcy, stops doing business, and has no assets. Financial difficulties won't make it worthless unless there is no hope that the company will pull through.

Enter a worthless investment with the proceeds (sales price) of zero and the word "worthless" in its description. Enter the correct cost or basis, date acquired, and December 31 as the date sold if you don't have a definite date it became worthless. 

Non-security investment sales are entered as follows: 

1. Open (continue) your return in TurboTax.
2. In the search box, search for investment sales then click the "Jump to" link in the search results.
3. Answer Yes to the question Did you sell any investments?
   • If you land on the Here's the investment sales we have so far screen, click Add More Sales.
4. Answer No to the 1099-B question.
5. On the next screen, select the type of sale you had (second home, collectible, land, other, etc.) and click Continue.
6. Continue following the onscreen instructions to enter the sale.

Note: You can deduct a net loss of up to $3,000 ($1,500 if married filing separately). Any capital loss you couldn't deduct this year can be carried forward and deducted on future tax returns as a capital loss carryover.