Expert Q&A

If your self employed business is a pass through entity. (meaning the profit or loss will pass to your personal income tax return on the front of your 1040) for example a Schedule C . the profit or loss from Schedule C will be reported on line 12 for the year 2010. If it shows a loss it will be subtracted from your Total income. (reducing your income)
If however you are an employee and are allowed to deduct employee business expenses on form 2106 that would flow to your Schedule A itemized deductions. Which only the amount above 2% of your adjusted gross income could you deduct. With a business you can deduct every expense directly related to your business (make sure you keep really good records and receipts). There is a great deal more information regarding this topic. You may contact me for more information if you like.