How to Turn a Loss Into Money


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How to turn a loss

There are a lot of things to worry about when you start your first business. Taxes is one of those things.
What if you have a loss? Are you still required to file a tax return? Will taxes be due? Here’s a question we got at USTaxAid.com.

Question:

If my business does not have any revenue its first year, am I still required to pay taxes?

Answer:

At a federal level, there is tax only if you have net profit. Some states will tax you based on the gross receipts (before deductions). Hawaii and Texas are a couple of examples. So, don’t assume that there is no tax due for your state just because you have no federal tax.

You may not need to file either, depending on your overall income. However, if you receive any kind of Form 1099, you’ll want to file a return. Otherwise, the IRS is going to ask.

And if you have a loss, that loss can actually be money in the bank for you. File so that the loss is carried forward and you’ll have an offset to future income. You can make money and not pay tax! Or, you may be able to carryback a loss to offset past income. That means a refund right away.

Either way, file your return! A loss really is money in the bank.

Want to learn more about what other business owners and real estate investors need to know? Join us at the twice monthly coaching class. You can sign up at: http://www.ustaxaid.com/coaching-program/


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