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Can you deduct business expenses from your income taxes from another job? |
I currently have a full-time job and I'm starting a side business. If the side business doesn't produce profit this year, can I still deduct my business expenses from the income taxes I pay from my day job? The side business will be a sole proprietorship. THANKS! First...stargates answer is totally WRONG! You have two sources of income. A W-2 income job and a self-employment income. Any expenses associated with your W-2 job is reported on Form 2106 and deducted as a misc. itemized deduction. Won't get it unless you itemize. The S.E income is reported on Schedule C of the 1040. You may deduct any normal and reasonable expense in the ordinary course of business, even if it results in a loss. You need to be aware of Hobby Loss rules. If you lose money 3 out of 5 years, the IRS can say your business is only a hobby and your expenses will be limited to your income. To avoid that, make sure you have a separate checking account, phone, insurance, business licenses. That way, you can prove you are TRYING to make a profit but aren't. Good luck Source(s): CPA I had a full time job and also a side construction business. I showed each income separately on the income tax forms. My job had income but my business had a loss. It's OK. As a sole proprietor, your gross income from your job and your business will be added together; then you deduct all business expenses and the amount remaining is your taxable income. I'm a sole proprietor. |
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