Most new inventors probably think their invention is neither a business or a hobby but “somewhere in between.” Even inventors who already have a patent may still think they don’t have or want a business or a hobby. Professional or full time inventors know they have a business and act accordingly.
When an inventor takes his first steps, such as hiring professionals like InventHelp or doing a patent search or making a prototype, the farthest things from their minds are the potential tax consequences. As he starts writing checks to pay for services, he begins to wonder, “Can I deduct these expenses?” That’s when the concept of a “business” begins to creep into his mind.
Everyone who has ever filed a tax return knows that there are some expenses that the IRS may allow taxpayers to deduct. The same is true for businesses.
Therefore, should an inventor keep track of their expenses? The answer is simple, YES!!! Even though you are just starting out, and you more than likely do not have an income from your invention, if you have created a business around your invention, you can show your expenses on your personal tax return, even if you have no sales. But, you cannot deduct them from your income. You can however capitalize these expenses from the very beginning because when the product earns an income, even years later, and those early expenses can be deducted. It is all very well explained on https://www.tmcnet.com/topics/articles/2018/06/13/438460-how-inventhelp-change-business-destiny.htm.
Even if you started your invention months or years ago, it’s not too late to claim your expenses. You must be able to prove the costs you incurred were directly related to your idea. Go back through your records, find credit card statements, canceled checks etc., and put them all in a file. Do a spreadsheet and explain what each expense was. Then file for your business.