QUESTION: I started an online business recently, which I’ve sunk a lot of money into. I haven’t made a dime yet. Do I still have to file business taxes? —Colleen DiPietro
ANSWER: Yes. Even if the business hasn’t turned a profit, you still need to file a business tax return, says Jay Silver, managing director at CBIZ Mahoney Cohen in New York. Reaping zero profits will neither help nor hurt you. However, if you’ve incurred losses related to the business, you could potentially reduce your personal income tax liability. Any losses up to the amount you originally invested in the company may be used to offset your other income, such as wages or interest income. (Note that this personal income tax deduction is only applicable for Schedule C businesses, S Corporations and limited liability companies).
and thanks to the stimulus act, any business with annual receipts averaging $15 million or less can carry the losses they incurred in 2008 as far back as 2003. Typically, you can only carry back losses for two years. (For our story on other tax perks within the Stimulus Act, click here.
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