Sole proprietorship profit remains same even when expenses are increased?

Forum|Forum|1 year ago
April 11, 2025
1 reply
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I’m using TurboTax Home & Business 2024.

I have a Schedule C business with income. My net profit is stuck at fixed value

When I try to increase deductible expenses like advertising, office supplies, or vehicle costs, TurboTax automatically reduces the home office deduction, and the net profit remains unchanged.

Is there a way to reduce the profit further without reducing the home office deduction?

TurboTax Home & Biz Windows

DawnC

Employee

No, your home office deduction is limited to your Schedule C profit. If you use the Actual Expenses/Regular method, you can carry the unused portion to next year's return, but if you use the Simplified method, any unused portion is lost.

Note that any deduction for the carryover amount is subject to the gross income limit for the following year, whether or not you still live in the same home that year.

The Home Office Deduction

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aroraanishAuthor

thanks for your response.

I am using actual expenses and not simplifies deduction.

If I increase other common expenses, turbotax reduces home office expenses by same amount and profit remains same, why does turbotax do that? I was hoping turbotax would keep home office deduction same and total profit would get reduced by the amount of increase of common expenses.

VolvoGirl

Employee

Do you have a Net Profit or a loss? If you are not showing a loss on Schedule C.

Some expenses, such as home office or section 179 depreciation can only be used to reduce your schedule C taxable income to zero, and not to create a loss. Excess deductions for these carry over to the next year. And you have to answer yes to both questions about exclusive and regular use, not just one. The area of your home office must be used regularly and exclusively for business to deduct it.

Or you checked the box on 32b saying Some Investment is Not at Risk.

If you have money not at risk you can not take a loss on schedule C. If you don't know what it means then probably All your Investment is at Risk (check Box 32a). It means you are using your own money for the business. People usually check the wrong box.