How do I claim a business loss if no income is received?

Question

I opened a home daycare this year. I will have only worked 2 days this year (28th and 31st of December) since I have opened (December 26th). How do I claim my expenses this year? I have not yet been paid, so I have no income to claim only expenses.

Edited to add: The expenses occured are start up expenses (training, background checks, drug testing, supplies, toys, mileage occured as a result of training, etc.). I am working through the government which is why I have not been paid yet. I plan on earning approximately $100 for the 2 days. My concern is if I can deduct this year's start up costs in 2008 or if I have to file them this year in order to claim them.

Answer 1

Just like you said. It's net loss. Just fill out your loss on a Schedule C just like any other normal return.

edit. I see you haven't got paid yet... How much are you expecting to be paid? Enough for it not to be a loss? You did earn it in 2007. Even though you didn't get it until maybe 2008.

Answer 2

Why in the world didn't you wait until January to open? Or at least have the first customers pay in cash?

I am assuming you are a sole proprietor.

The expenses incurred before you opened are called startup expenses. These are generally amortized over 60 months. You start by putting these on form 4562. This carries over to the schedule C.

Assuming you are licensed, you may have 2 days of use of your home as a daycare. This won't give you a lot of expenses.

Then the loss is carried to the front of your tax return and is used to reduce other income.

Answer 3

File Schedule C with your 1040. You would show no income on the form, and report your expenses beginning 12-26.

Keep in mind there are special rules for startup costs (in your case expenses incurred prior to 12-26). On a good note, in-home daycare establishments are eligible for much more liberal business use of the home deductions.

Answer 4

You can write off any expenses that you actually incurred in 2007.

If asked, you can simply state that you have not received any income since you just openned the business.

Answer 5

For home daycares - check out http://www.redleafpress.org/index.cfm and order the tax workbook - make sure you get the correct year. It will be published in January

This will be your BEST investment trust me!

Answer 6

With no income from your business you cannot write of losses against your owed taxes.