Santa Monica, CA asked in Tax Law for California

Q: I'm an independent contractor with no "earned" income in 2021 but had unemployment, can I still take Sch. C expenses?

Normally, I am self-employed (independent contractor) freelance exec. assistant and run my business from my apartment and use Schedule C to deduct expenses for that business. However, from Jan. to Sept 2021 I collected Pandemic Unemployment Assistance and did not have any earned income and my PUA expired in Sept. 2021. However, my business was still "in business" but I had no clients and earned no income, but I still had the expenses of keeping a home office prepared while I looked for work. My question is if I can still take some expenses for my business as deductions even though I didn't have "earned" income.

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2 Lawyer Answers
David S. Greenberg
David S. Greenberg
  • Tax Law Lawyer
  • San Diego, CA
  • Licensed in California

A: Yes.

Rod B. Tuazon
Rod B. Tuazon

A: Just to clarify, it you looked for work unrelated to your business, the expenses may not qualify. However, if the expenses are related to maintaining your current business, they may qualify as expenses even if you didn't have earned income for that year.

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