Expenses Almost Same As My Income, Good Or Bad?

[legomom922]

My income was 4150, and my expenses including my depreciation, are like 3980..I have no idea how my "time" worked doing other things when DC kids are not here, or my mileage, will come into play and what kind of outcome it will give me, but does this mean I will probably end up with a loss? How does that affect my taxes? Is it a good thing or a bad thing? Should I take some expenses out?
What do I do?

[TomCopeland]

Expenses = Income

You should claim all the expenses you are entitled to take. Showing a loss in one year is not a big deal. If you show losses 3 out of 5 years you will probably attract the attention of the IRS, so try to avoid this by not claiming some deductions if you have to. A loss is good in that it will reduce your federal and state taxable income. Losses over a number of years will potentially reduce your Social Security benefits.

[legomom922]

You should claim all the expenses you are entitled to take. Showing a loss in one year is not a big deal. If you show losses 3 out of 5 years you will probably attract the attention of the IRS, so try to avoid this by not claiming some deductions if you have to. A loss is good in that it will reduce your federal and state taxable income. Losses over a number of years will potentially reduce your Social Security benefits.

Would I be more apt to get audited by having a lossin the 1st yr? Or is that pretty common and not be flagged?

I havent even entered my home improvements yet, and now that is will be a loss, I dont know if I should enter them or not.. I guess I feel kinda guilty, LOL

[TomCopeland]

Loss

You are not more likely to be audited if you show a loss your first year. Never feel guilty for claiming deductions you are entitled to.

[Stacy214]

I think the first year we all experience this, I had to "re-start" up my home daycare (divorced and moved to a different location) and my previous children had moved onto kindergarten, so that worked out. Anyway, this year I just had 1 child during the summer (when I was racking up most of my start up expenses then total of 3 for the last 3 mos. I have not tallied up everything (I know I know, but doing it this weekend) so I am pretty sure that I will have more deductions as well.

[Symphony]

I have shown losses 8 out of the 10 years I have been in business. We have been audited twice and my tax guy is so awesome that those two years the IRS owed us more than the 5-10 thousand they already owed us

The bad thing for us was that none of my income counted when we went to get our house because our taxes always showed a loss. The two years I reported a profit were so we could use my income on a mortgage application