Non paying clients a tax write off?

8 years 9 months ago #445524 by Missy J
Those of you who have had a client flake on money that was owed to you. Were you able to write off that as a lose? 100% of it's value?


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8 years 9 months ago #445534 by garyrhook
I don't know that there are any CPAs or tax lawyers here; they would be better suited to answer a question such as this. You also don't indicate how you are filing.

I'll guess you are using a Schedule C as a Sole Proprietor, and have all the pieces in place for a legitimate business in your state of residence. I'm pretty sure there is a spot on that form for unrecoverable debt or unpaid outstanding balances, or whatever it's called. So you can count it against income. I'm guessing that the documentation in TurboTax or the H&R Block software discusses this issue.

But I'm not a lawyer, nor do I play one on TV or the interwebs.


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8 years 9 months ago - 8 years 9 months ago #445537 by icepics
It sounds like you need to eliminate this type thing happening in the future by getting payment before you do a session and only providing photos after payment is complete. I agree you'd need to check with a tax professional.

If you haven't already try asmp.org or PPA for resources.

Sharon
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8 years 9 months ago - 8 years 9 months ago #445542 by hghlndr6
If you use accrual basis accounting, you can write off all or part of a business bad debt if the amount was included in income. If you use cash basis accounting, you cannot.

See this: www.irs.gov/taxtopics/tc453.html
The following user(s) said Thank You: garyrhook
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8 years 9 months ago #445684 by Scott Klubeck
I'm pretty sure that you can, but I would still reach out to a licensed tax guy


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8 years 9 months ago #445727 by Miss Polly
All good points, at the need of the day, when it comes to tax stuff. I always consult with my tax guy. It's nice to get opinions on these boards, but when it comes time to putting ink to paper, always check with a pro.


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8 years 9 months ago #445865 by Shadowfixer1

hghlndr6 wrote: If you use accrual basis accounting, you can write off all or part of a business bad debt if the amount was included in income. If you use cash basis accounting, you cannot.

See this: www.irs.gov/taxtopics/tc453.html


This is the correct answer. You can write off the expense for the shoot like mileage or supplies but you can't write off the money you would have gotten. That would be a slippery slope if you think about it.
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