Turbo Tax Help!

[lunademiel]

The CRA and Turbo Tax have been unable to answer my question so I am hoping that you wonderful ladies may be able to!

So my business started February 2012, this is when my first day of income was earned. I purchased supplies for the daycare in Nov/Dec 2011.

Now when I try to input these deductions into turbo tax, the only way I have access to the T2125 form is to check the box that indicates I earned self-employment income in 2011, which I did not

Anyone have any idea? I'm getting a little frustrated!

[Inspired by Reggio]

That is a tough one because depending on the 'expense' they will not allow you to incur it within a certain time frame of starting your business and the 'computer' is figuring that a YEAR is too long to have incurred an expense when not having made income when in fact it was only two months.

IMO two ways you can handle this - I would either just check that I did have income for 2011 so that it allowed me to access that part of the program and than write off these expenses against any non self employed income and when it asks your income put in $0 for your income or if it wont let you - pay yourself $1 for the time you spent advertizing your business or whatever Or the other route is that because it is only two months into 2011 and still reasonable 'start up expenses' from that year I would just keep your 2011 expense receipts and write them off in 2012's income and if you ever get audited just explain that you did not official have income in 2011 so you rolled these receipts over into 2012 against that income. My first year I started in September so only had 4 months of 'income' compared to A LOT of start up expenses from adding a fire exit to the playroom and the toys/equipment that tax year so my accountant wrote off 'some' of my start up expenses against 2007 and than we wrote off more for 2008, 2009, 2010 and this year will be my final year...so even though some of those expenses were smaller than required to 'amortize' them and I COULD have wrote them all off in the first year we 'bundled' them into one expense and amortized them to give me more deductions over a longer period - because otherwise my first year I would have reduced my income to a 'negative' and lost the benefits of those write offs against actual taxes cause once you reach zero does not matter how much in the 'whole' you were you do not get any more refund or credit

[lunademiel]

Thank you, I think I will go the second route, save them for next year. It is only $750 worth of stuff, it's not a lot.

Thanks!

[playfelt]

Keep the receipts for the supplies even though they are dated 2011. Then at some point in 2012 after starting your daycare "sell" the supplies from personal to business - called a change in use expense. Then the amount is claimable on your 2012 taxes which you will file next year.