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Ed Johnson
Ed Johnson, Tax Preparer
Category: Tax
Satisfied Customers: 10760
Experience:  GPHR Cert; U.S. Treasury Tax Advocacy Panel appointee
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How many years can you claim a loss on a side business

Customer Question

I have a side business doing videography/photography
Submitted: 8 years ago.
Category: Tax
Expert:  Ed Johnson replied 8 years ago.

Dear msm,

 

Thank you for your question.

 

I apologize for it taking so long but it was in the wrong section. We just picked it up in tax.

 

The IRS says that if you do not make a profit after a period of time then you can be classified as a hobby. The primary difference to you is that if you are a hobby, you can normally only write off the expenses to the level of income you bring in.

 

The general rule is making a profit in at least 2 of the last 5 years. BUT there is an exception that can allow you to continue to operate as a business.

 

Read more about this here: http://www.irs.gov/newsroom/article/0,,id=172833,00.html

 

http://www.irs.gov/irs/article/0,,id=186056,00.html