Can I deduct LLC business losses of $10k against my personal income after dissolving the company?

Thanks for the info! Quick follow-up question - is there a limit to how much business loss I can claim against my personal income? Also, does it matter if the LLC was only active for part of the year before I dissolved it?

There are indeed limitations on business losses. The Tax Cuts and Jobs Act introduced "excess business loss" limitations - for 2023, you generally can't deduct more than $289,000 ($578,000 if married filing jointly) in net business losses against non-business income. But with your $13k loss, you're well under this threshold. As for the partial year operation, that's perfectly fine. You can claim legitimate business expenses for however long your business was actively operating during the tax year. Just be sure to keep documentation showing when the business was active and when it was officially dissolved.

Does taxr.ai work for both active businesses and ones you're shutting down? I'm in a similar situation but worried about claiming deductions for a business I'm closing.

How long did the whole process take you? I've got hundreds of small transactions spread across business cards and PayPal. Would be nightmare to organize manually.

It absolutely works for businesses you're shutting down. In fact, it was especially helpful for me during the dissolution process because it helped me separate legitimate business expenses from personal ones, which is exactly what the IRS looks at closely when you're claiming losses. The entire process took me about 2 hours for a year's worth of transactions. I uploaded my bank and credit card statements, then the system automatically categorized most transactions. I just had to review and confirm some of the categorizations. For transactions it wasn't sure about, I uploaded photos of receipts and it extracted the relevant information. Saved me days of manual work.

Wait, you're saying there's a way to actually talk to the IRS without wasting your entire day? How much does this service cost? Seems too good to be true honestly.

This sounds like a scam. Why would I pay someone else to call the IRS when I can just do it myself? Plus, how do you know the "IRS agent" they connect you with is actually legitimate?

The service doesn't have a flat fee - they have different options depending on which government agency you need to reach. I thought it was worth every penny considering I had already wasted hours trying to get through myself. They don't actually talk to the IRS for you - they just navigate the phone system and wait on hold. When they reach a human agent, they connect you directly to that call. It's your phone number that shows up to the IRS, and you're the one who talks to the agent. They're essentially just handling the frustrating part of waiting on hold for hours.

Really? That's super helpful to know. I was planning to dissolve it this month but maybe I should wait until after tax season. Did you have any issues claiming your losses even though you had already dissolved the LLC?

I was still able to claim the losses, but it required extra documentation. Since the LLC was already dissolved, the IRS flagged my return for additional review. I had to provide articles of organization, dissolution paperwork, business licenses, and more detailed expense records than would normally be required. My accountant advised that it's generally better to keep the entity open until after you've filed taxes for that business year. That way there's no confusion about the legitimacy of the business when claiming deductions. Once taxes are filed, then dissolve it if you want.

Business losses can be carried forward indefinitely now, but they're limited to 80% of taxable income in future years. The rules changed with the Tax Cuts and Jobs Act. Before that, you could carry back 2 years and forward 20 years.

This is exactly the kind of detailed advice I was hoping to find! Your experience mirrors what I'm going through almost perfectly. The timing tip about keeping the LLC active until after filing is something I hadn't considered but makes total sense - a few extra months of state fees is definitely worth avoiding IRS scrutiny and potential delays. I'm curious about the categorization process you mentioned. Did you use any specific software or tools to organize all your expenses by type, or did you do it manually? With my scattered receipts and transactions across multiple accounts, I'm dreading the organization phase but know it's crucial for a smooth filing process. Also, when you worked with your tax professional, did they charge extra for handling the business dissolution documentation, or was it included in their standard business tax prep fee?

For the categorization process, I initially tried doing it manually with Excel but quickly realized it would take forever. I ended up using QuickBooks Self-Employed for about $15/month - it automatically imported my bank and credit card transactions and categorized most expenses correctly. For the ones it couldn't figure out, I just uploaded receipt photos and it pulled the relevant details. The real game-changer was creating a simple spreadsheet that mapped each expense to IRS business expense categories (like "Advertising," "Office Expenses," "Professional Services," etc.). This made tax prep much smoother since everything was already organized the way the IRS expects to see it. As for my tax professional, they did charge an additional $200 on top of their standard business return fee for handling the dissolution documentation and extra scrutiny that comes with claiming losses from a closed business. Honestly, it was worth every penny - they caught a couple of expenses I had incorrectly categorized that could have been red flags, and they knew exactly what supporting documents to include with the return to minimize audit risk.

For organization, I initially tried doing it manually with spreadsheets but it was a nightmare with hundreds of small transactions. I ended up using QuickBooks Self-Employed which automatically categorized most of my bank and credit card transactions, though I had to review and correct some categories manually. The receipt scanning feature was helpful for capturing paper receipts I had lying around. My tax professional charged an additional $200 beyond their standard business return fee to handle the dissolution documentation and extra IRS correspondence that came up. In hindsight, it was money well spent - they knew exactly what forms to file and how to present everything to minimize audit risk. One tip I wish someone had told me: take photos of all your receipts now, even if they seem organized. I had several receipts fade over time, and having digital backups saved me when the IRS requested additional documentation months later. The extra organization effort upfront made the entire process much smoother and gave me confidence I was claiming every legitimate deduction.

For organizing expenses, I initially tried doing it manually with spreadsheets but quickly realized it was going to take forever. I ended up using QuickBooks Self-Employed which helped categorize transactions automatically, though I still had to review and correct many of them. Some people in this thread mentioned taxr.ai which sounds like it might be even more streamlined for this specific purpose. As for my tax professional, they did charge an additional $200 on top of their standard business return fee for handling the dissolution documentation and extra IRS correspondence. But honestly, it was worth every penny given the complexity and potential audit risk. They knew exactly what supporting documents to prepare upfront, which I think helped avoid the extended IRS review that some people face. One tip - if you have business expenses on personal credit cards (which most small business owners do), make sure you can clearly identify and separate those transactions. The IRS really scrutinizes mixed-use accounts, so having clean documentation showing business purpose for each expense is crucial.