What Happens If My Taxable Income Is Negative?

Should retained earnings be positive or negative?

If the cumulative earnings minus the cumulative dividends declared result in a negative amount, there will be a negative amount of retained earnings.

This negative (or positive) amount of retained earnings is reported as a separate line within stockholders’ equity..

What does a negative operating income mean?

The operating income of a company is the gross profit minus operating expenses. Gross profit is sales minus cost of goods sold. … Negative operating income is an operating loss, which means that cost of goods sold and operating expenses — combined or individually — are greater than sales.

Why is my refund negative?

If your employer has already withheld income taxes, that total will appear on your W-2. … After you’ve subtracted all available credits and withholdings from the total taxes you owe, you will have either a positive or negative number. A positive number means you still owe income taxes. A negative number means a refund.

What happens if my taxable income is 0?

To the IRS, you having zero “taxable income” means you don’t owe a penny of income tax. Even if your deductions and exemptions wipe out all your income, however, you may still end up having to pay tax for other reasons.

What if my taxable income is less than zero?

Having a negative taxable income is not bad; it simply means that you have no tax liability. No tax liability means you owe zero taxes unless you are self employed and owe FICA taxes. The FICA taxes are calculated below the taxable income line.

Can you have positive cash flow and negative net income?

Key Takeaways: It is possible for a company to have positive cash flow while reporting negative net income. If net income is positive, the company is liquid. If a company has positive cash flow, it means the company’s liquid assets are increasing.

What does negative free cash flow mean?

A company with negative free cash flow indicates an inability to generate enough cash to support the business. Free cash flow tracks the cash a company has left over after meeting its operating expenses.

What is a negative profit margin?

According to Cheng Lee, et al., in “Statistics for Business and Financial Economics,” when your business generates a net loss, you get a negative profit margin, which business owners typically refer to just that way. A negative profit margin expresses the loss, rather than net income, as a percentage of sales.

Is negative cash flow bad?

Although companies and investors usually want to see positive cash flow from all of a company’s operations, having negative cash flow from investing activities is not always bad. … It’s entirely possible and not uncommon for a growing company to have a negative cash flow from investing activities.

Can you have negative income?

Companies can have a negative net income, a scenario more often referred to simply as a net loss. A net loss occurs when a company’s costs of goods sold, fixed costs and irregular costs exceed the revenue the business generated during a given period.

What if my net income is negative?

Net income is sales minus expenses, which include cost of goods sold, general and administrative expenses, interest and taxes. The net income becomes negative, meaning it is a loss, when expenses exceed sales, according to Investing Answers. Total cash flow is the sum of operating, investing and financing cash flows.