HiI'm Anne. I've been preparing taxes for 28 years and I'll be happy to help you. The making a profit 3 out of 5 years is really "the rule of thumb", but it is by no means written in stone. I have prepared many taxes where my client has not shown profit for 3 or more years, and none have been audited. What the IRS
looks at, (and what I also convey to my clients) is HOW you are running your business. Did you advertise your company/services? Do you have a separate checking account, cc, etc that is used 100% for business (this is a big one, the IRS doesn't like business and personal funds to be "co mingled" ) Have you shown a profit in the past? Did you have extra expenses ? Is this just a paper loss (meaning that things like mileage and depreciation
caused the loss, as opposed to say, selling items at less than what you purchased them for) It sounds like you have had some successful years where you made a profit, and if I were you, I would take every expense. In fact, we as tax preparers
are REQUIRED to report all of your expenses related to your business, especially if you are able to claim the Earned Income Credit
. So report your all of your income
and expenses that you incurred in 2015. If this answer has been helpful to you, please take the moment to rate
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