How Many Years Can I Take a Loss on My Business?

The IRS will only allow you to claim losses on your business for three out of five tax years. If you don’t show that your business is starting to make a profit, then the IRS can prohibit you from claiming your business losses on your taxes.

If you try to claim a loss on your hobby (even if you consider it a business), it could trigger an audit by the IRS.

How can I prove my business is more than a hobby?

The best way to show the IRS that you’re a serious business owner is to keep records. Most people don’t keep records regarding their hobbies, so this simple tip can help prove that your intention is to run a profitable business.