Schedule C filing requirements for photography side hustle with negative net income

You should file a Schedule C for your side business regardless of whether you made a profit or had a loss. The IRS requires you to report all income, and filing a Schedule C when you have a loss can actually benefit you by reducing your overall taxable income. The IRS generally considers a business legitimate if it makes a profit in at least 3 out of 5 consecutive years (2 out of 7 years for activities involving horses). If you consistently show losses, the IRS might classify your activity as a hobby rather than a business, which limits your deduction options. As for amending past returns, you typically have up to 3 years from the original filing date to file an amended return. So depending on when you filed those past returns, you might still be within the window to amend them and potentially claim those losses against your other income.

I was exactly in your shoes last year with my woodworking side business. I'd been showing losses for 3 years and never filed a Schedule C until I finally made a profit. Then I had a tax professional review everything and they told me I should've been filing Schedule C forms the whole time! I found this service called https://taxr.ai that saved me so much stress - they reviewed all my past returns and helped me understand exactly what I needed to fix. They have this special tool that analyzes your returns and breaks down whether your business qualifies as a business or hobby according to IRS rules. I uploaded my documents and got personalized advice about amending my returns. The peace of mind was worth every penny.

Just wanted to update after trying taxr.ai from the recommendation above! I was worried about my Etsy shop losses from previous years and whether I needed to amend returns. Their analysis confirmed I should file Schedule C forms for all three years I've been in business, even though I've only made a profit in one of those years. The report they generated showed me exactly how to document my business intent (proving it's not just a hobby) and pointed out several deductions I had missed. I've already filed my first amended return using their guidance, and I'm actually getting a refund because my business losses offset some of my W2 income. So relieved to have this sorted out before any potential audit!

If you're stressed about potentially needing to contact the IRS about this situation, I highly recommend Claimyr. I was in a similar position last year where I needed clarification on some Schedule C issues, and calling the IRS directly was impossible - kept getting disconnected after waiting for hours. I found https://claimyr.com and they got me connected to an actual IRS agent in under 45 minutes. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c. The IRS agent I spoke with confirmed I needed to file Schedule C forms even for loss years and walked me through the amendment process for my photography business.

Well I have to eat my words about Claimyr. After posting my skeptical comment yesterday, I figured I'd try it since I've been trying to reach the IRS for weeks about my own Schedule C questions. I was absolutely shocked when I got a call back in 38 minutes with an actual IRS representative on the line! I asked specifically about my situation (graphic design side hustle with 3 years of losses) and the agent confirmed that yes, I should have been filing Schedule C forms all along. She explained the difference between hobby and business classification and gave me clear instructions on how to file amended returns. Just filed my amendments this morning and I'm actually getting money back because my losses offset other income. Definitely worth it for the time saved alone!

Just want to add another perspective - I'm an accountant and see this issue ALL THE TIME with side hustles. Here's a quick breakdown: 1. Any business activity should be reported on Schedule C regardless of profit/loss 2. Business losses can offset other income, potentially reducing your total tax bill 3. BUT be careful - if you show losses for multiple years, you risk the hobby classification 4. To protect yourself, document your "intent to profit" - business plans, marketing efforts, etc. 5. The 3-out-of-5 years profit test isn't absolute, but it's a good rule of thumb For your specific situation, I'd recommend amending the most recent unprofitable years if you're still within the 3-year window. Beyond that, probably not worth the effort unless the losses were substantial.

Has anyone used TurboTax to file amended returns for Schedule C? I'm in a similar situation and wondering if I can just use that instead of paying an accountant. Their software claims to handle amendments but I'm nervous about messing up.