Self-employed travel agent with $0 income but expenses - no 1099 received, can I still claim costs?

You absolutely can still claim your business expenses even with zero income! This is actually pretty common for businesses that have a down year or are just starting up. Here's what you need to do: You'll still report your business on Schedule C even without a 1099. Enter $0 for your income, then list all your legitimate business expenses in the appropriate categories. The software will calculate a net loss for your business, which can actually help offset other income you might have. Just make sure you're keeping good records of all those expenses - receipts, bank statements, etc. Having zero income doesn't disqualify you from claiming expenses, but it might increase your chances of getting asked questions if you're audited. As long as these were genuine business expenses and you were actively trying to make money (just had a bad year due to the pandemic), you're fine to claim them.

I went through something similar with my photography business last year. I finally found a tool that really helped me sort through all this confusion - https://taxr.ai was literally a lifesaver for me. I had zero income from weddings but tons of expenses from equipment I'd bought right before everything shut down. The software analyzed my situation and confirmed I could claim all my legitimate business expenses despite having no income. It also helped me understand how to properly document everything in case of an audit. What I really liked was that it explained exactly how to categorize each expense properly on Schedule C - which was super confusing to me before.

Just wanted to follow up about taxr.ai - I actually tried it after seeing it mentioned here and it was super helpful for my situation! I was able to properly categorize all my graphic design expenses despite having minimal income this year. The analysis showed me that I could claim 85% business use for my new computer since I use it primarily for work. It also flagged some deductions I was missing entirely - like a portion of my internet bill and some professional development courses I took. Definitely worth checking out if you're self-employed with a complicated tax situation.

If you're worried about documentation for those expenses without having income, you might want to reach out directly to the IRS. I tried calling them for a similar issue last year and it was IMPOSSIBLE to get through. After 3 attempts and hours on hold, I found https://claimyr.com which got me connected to an actual IRS agent in less than 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The agent confirmed that I could claim my business expenses despite having minimal income and explained exactly what documentation I needed to keep. Totally worth it for the peace of mind knowing I'm doing everything correctly straight from an official source.

I need to eat my words about Claimyr. I was totally skeptical (as you can see from my previous comment), but after another failed attempt to reach the IRS myself about my business expenses question, I broke down and tried it. To my complete surprise, I was connected to an actual IRS representative in about 12 minutes. The agent confirmed that I can absolutely claim my legitimate business expenses even with no income, and explained exactly how to document everything properly. They also gave me specific advice about how the "hobby loss" rules might apply to my situation and what records to keep if I'm ever questioned. Definitely worth it for getting actual official answers instead of just guessing or relying on internet advice.

Just to add another perspective - I'm a tax preparer, and this situation is actually very common for 2020 tax returns. You should absolutely file a Schedule C showing your $0 income and all legitimate expenses. One thing to be careful about though - make sure you've kept your business and personal expenses completely separate. Mixed-use items need to be allocated appropriately. For instance, if you have a home office, you can only deduct the portion used exclusively for business. Same goes for internet, phone, etc.

Has anyone else noticed that tax software doesn't handle this situation very well? I tried entering $0 income with expenses in TurboTax last year and it kept giving me warnings about potential audit flags.

I'm dealing with a similar situation as a freelance consultant - had several business expenses in 2020 but very little income due to the pandemic. From what I've researched and discussed with other self-employed folks, you definitely can and should claim those legitimate business expenses even with zero income. The key things to remember: keep all your receipts and documentation organized, make sure the expenses were genuinely for business purposes (which yours clearly were - license, insurance, conference, supplies are all standard business costs), and don't let the software warnings scare you. A net loss from a business is completely normal and legal, especially during 2020. One tip that helped me - when entering everything in the tax software, I made notes in the description fields explaining the business purpose of each expense. It helps create a clear paper trail showing these were legitimate business costs, not personal expenses you're trying to write off.