Startup Costs
Deduct up to $5,000 in business startup costs the year you launch, with excess amortized over 180 months.
Tax Form
Form 4562, Part VI
Estimated Savings
$500-5,000/year
IRS Reference
Publication 535
Income Level
How It Works
Startup costs are expenses incurred BEFORE your content business officially begins operations. You can deduct up to $5,000 of these costs in the year your business starts, with any excess amortized over 180 months (15 years). This $5,000 limit phases out dollar-for-dollar once startup costs exceed $50,000.
IRS Rules & Requirements
- Can deduct up to $5,000 in the year business begins operations
- $5,000 limit reduced dollar-for-dollar when startup costs exceed $50,000
- If total costs exceed $55,000, no immediate deduction (must amortize all)
- Remaining costs amortized over 180 months (15 years)
- Must be costs that would be deductible if incurred by existing business
Real Examples
$8,000 startup costs: Deduct $5,000 year 1, amortize $3,000 over 180 months
$3,000 startup costs: Deduct full $3,000 in year business begins
$52,000 startup costs: Deduct $3,000 year 1 ($5,000 - $2,000 over $50K threshold)
Common Mistakes to Avoid
- Claiming startup costs in years BEFORE business actually begins
- Not understanding the $50,000 phase-out threshold
- Confusing startup costs with organizational costs (separate rules)
- Pre-opening inventory is NOT a startup cost (it's a capital asset)
Pro Tip
Your business 'begins operations' when you first offer content that could generate revenue - not when you started planning or bought equipment. Track the exact date you first published monetizable content.
Related Deductions
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