I have a small business here in the US that incurred a net loss this year. I have spent more than what I have earned, and according to quickbooks, I have +X amount of total deductions for 2016.

+X meaning a positive number

What does this mean? I receive federal money because I was in the military and because I'm a college student. Therefore, I do not have any earnings whatsoever from jobs.

Going back, what does a total deductions number mean and what is going to happen to it considering my financial situation?

UPDATE: I have a sole proprietorship.

  • Is your business a pass through entity, a C-corp, or something else?
    – d_dd
    Dec 24, 2016 at 22:33
  • It is a sole proprietorship @d_dd
    – Aurora A
    Dec 24, 2016 at 22:43

1 Answer 1


If your sole proprietorship losses exceed all other sources of taxable income, then you have what's called a Net Operating Loss (NOL). You will have the option to "carry back" and amend a return you filed in the last 2 years where you owed tax, or you can "carry forward" the losses and decrease your taxes in a future year, up to 20 years in the future. For more information see the IRS links for NOL.

Note: it's important to make sure you file the NOL correctly so I'd advise speaking with an accountant. (Especially if the loss is greater than the cost of the accountant...)

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