Every business, big or small, faces difficult times.

There will be times when your income will keep on flowing, and there will also be times when you won’t have any income at all.

In this case, did you know that you can still have a home-office deduction even when you don’t have an income for a year?

While this may sound confusing, this article will explain the things that you can do when your business is unable to have an income for a year.

Reasons for Loss of Income

There are several reasons for a business not to have an income for a year. Perhaps, you might have started your business late in the year, and you already have expenses but haven’t received any income. If this is the case, you still have tax deductions that can be claimed and probably a tax loss that you can carry over to the next year.

Another scenario might be that you have an ongoing business, but you have a bad year that your expenses are higher than your actual income. Don’t worry because, as mentioned, you will have a tax loss that can be carried over the following year.

What to do next?

File a Tax Return

Even if you have a tax loss from your business, it is advisable that you should still file a tax return. Remember this, under the current tax law; you may carry forward a year’s tax loss to the succeeding year since that loss can reduce your tax for the next year.

To make it clearer, if, for instance, you did not have an income for 2018, you may carry forward the tax loss for 2018 to 2019. This will result in reducing your taxes for 2019.

The tax loss that you can carry forward is officially known as the Net Operating Loss (NOL). Business taxpayers can think of an NOL as a tax deduction savings account for the following year. Now that’s looking at a loss with optimism.

Having said that, it is advisable that you:

  • Claim all your tax deductions despite having a tax loss.
  • File a tax return even if it includes a loss so that the IRS is aware of your situation, and it will be documented appropriately.

Claim the Home Office

While some people may tell you not to claim the home office because you won’t get a deduction, you might be missing out on a few things.

Not claiming the home office as your principal place of business means that you have commuting mileage. This includes personal, nondeductible mileage.

Another thing is if you don’t claim the home office because you won’t have instant benefits, you will lose your chance of having home-office deduction carryovers to the following years.

Personal Versus Business Miles

Not working from your own home office also means that you have personal mileage when you travel from home to your first business stop and from your last business transaction to your home.

For instance, without a home office, you would need to travel a few miles o get to your client. The miles you get from your trip are considered personal miles.

Similarly, the miles you travel to get to your office are also recorded as personal miles.

However, if you have a home office that serves as your principal office, the miles that were mentioned earlier will be considered as business trips. And yes, this means that you won’t have any commuting mileage.

For this to be possible, you should remember to claim the office in your home as your principal place of business.

Understanding the Carryover

As you might know, not having a current-year Schedule C income also means that you won’t have a current-year tax benefit from the home office. But, you should also know that the deductions that were not allowed on the current year will be carried over next year.

So, if you don’t claim the home-office deduction, you will also lose the expenses that you can carry over.

Simply put, claim the home office so that you can qualify for the carryover in case that you have no income.


Not having an income is certainly not favorable for any business, but you should know that there are things that you can do to benefit from the situation.

By simply claiming the office in the home as your principal place of business if you don’t have a business income or if you have experienced business loss for the year, you can actually still have the following benefits:

  • Carryover the Schedule C-denied home-office deductions that did not get tax benefits this year to next year where they can offset your income;
  • Eliminate personal mileage and incur more business miles; and
  • Create a NOL for any business loss incurred for the current year to be applied to the following year’s taxes.