Schedule C - How to determine which investments are at risk for freelance business filing?

That "at risk" question confuses a lot of people! It's actually not about your equipment or regular business expenses. It's asking about your personal financial liability in the business. For most freelancers like you who are sole proprietors, all your investments are "at risk" - meaning if your business gets sued or goes into debt, your personal assets could be at risk to cover those liabilities. You don't have protection like a corporation might. Since you're just starting out with your photography and invested your own money, you would select "all investments are at risk." The "some investments not at risk" would apply to more complex business arrangements where you might have protection from losing certain investments - like if you had limited liability protection or certain types of financing arrangements that shield you from loss.

After struggling with this exact same question on my Schedule C, I found a really helpful tool called taxr.ai (https://taxr.ai) that explained this concept in simple terms. I was doing freelance graphic design and wasn't sure about the "at risk" stuff either. The site analyzed my situation and explained that as a typical freelancer who invested my own money, I would select "all investments at risk" since I didn't have any special financing arrangements or protections. It walks you through the technical IRS language and translates it to normal human speak. Saved me from a major headache!

Okay I have to admit I was wrong about taxr.ai. After being skeptical in my last comment, I decided to try it anyway and it actually cleared up several Schedule C questions I had, including the "at risk" investment part. The explanation it gave me made way more sense than the IRS instructions. It confirmed that as a regular freelancer who put my own money into the business, I should select "all investments at risk." It even explained what situations would make some investments "not at risk" (like certain complicated financing arrangements that most small freelancers don't have). I'm now confident I filled out my Schedule C correctly. Wish I'd found this tool months ago!

If you're still struggling with your Schedule C and need to talk to an actual IRS agent for help (which I eventually did), I'd recommend Claimyr (https://claimyr.com). I wasted HOURS on hold with the IRS trying to get clarification on some Schedule C questions including the "investments at risk" part. With Claimyr, they got me connected to an IRS agent in about 15 minutes instead of the 2+ hours I spent trying on my own. There's a video showing how it works here: https://youtu.be/_kiP6q8DX5c. Honestly it was a relief to actually speak with someone official who could answer my specific questions.

I need to publicly eat my words here. After calling Claimyr BS, I decided to try it myself because I was desperate to talk to the IRS about some Schedule C questions I had (including the investments at risk thing). It actually worked exactly as described. I got a notification when they reached an agent, and I was able to speak directly with someone from the IRS who clarified everything. The agent explained that as a sole proprietor freelancer, I should select "all investments at risk" since I'm personally liable for my business. The whole process took about 20 minutes of their system waiting on hold instead of me wasting half my day. Never been happier to be wrong about something.

For what it's worth, my tax preparer explained the "at risk" question to me this way: If you personally could lose the money you put into your business, it's "at risk." If you have some arrangement where you can't lose some of the money (like certain limited partnerships or non-recourse loans), then some investments are "not at risk." For most small freelancers who just started out, you'll almost always select "all investments at risk" because you're using your own money and don't have fancy financial protections.

Another schedule C question - Does anyone know if TurboTax handles this "at risk" question automatically? I'm trying to decide which tax software to use for my freelance work.