By Sarah Morgan
Question: I’m an independent contractor that works for an NBA team. With their current labor situation [the professional basketball league locked out it players in July when its collective bargaining agreement expired], if games aren’t played, I don’t get paid. Can I use those games that I’m not getting paid, through no fault of my own, as a business loss tax deduction?
-Carson Belkin, San Antonio, Texas
Answer: No way, says David B. White, a tax attorney and CPA and the president of Bloomfield Hills, Mich.-based David B. White Financial. “You don’t pay tax on money that you didn’t earn, and you don’t write off things that you didn’t pay,” he says. As an independent contractor, you can deduct expenses like running advertisements or taking a client to lunch to discuss a job, but you can only write off money you’ve actually spent. It’s no different from someone with a salaried position getting fired; they can’t write off the income they would’ve received had they kept their job. For freelancers, this kind of problem is the best reason to build a diversified client base so you’re not too dependent on any one client, White says.