How to apply business deductions on combined income

Question

My wife is a realtor (sole proprietor ) and has $0 income so far. I'm a full time employee. We usually file taxes jointly. Can we apply any of her deductions to our combined income? Or will her "business expenses" only be applicable to her business income?

Natalie Kolodij · Answer

Assuming you file married jointly it will all get reported on the same 1040.

Real estate is active income - so like Ash mentioned any losses will be deductible on the 1040- so they will offset your w2 income.

Make sure that everything you're deducting is deductible and talk to a tax pro about expenses incurred before in service or education to receive her license and such.

Ashish Acharya · Answer

Her active loss (since there is no income) will go against your income when you file joint income.

So, at first, yes her expense would go against her income if any. Since there is no income, her activity has loss. That loss will be combined with you other income and decrease you taxable income.

How to apply business deductions on combined income

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