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Posted: 2/10/2006 10:14:29 PM EDT
Okay, I am no tax-wizard. I simply file mine and my wife's W-2's, no kids. We usually get little to no refund.

It was suggested by our tax-preparer that we claim our hobbies as small-businesses. My in-home Gunsmithing/parts locating/ordering, and my wife's woodworking. She said it would really help us get more back from Uncle Sam.

So we've decided to start tracking our respective hobbies/small money-making operations. Hell, what do we have to lose?

So, my question(s): Does it matter if you make a profit, or a loss by end-of-year? Would a (small) loss be more helpful?

Who else here has done this (mind you- without a business license, just out of your home)? (She stated it was actually pretty common, citing women selling Avon, or Home Interiors being the most prevalent).
Link Posted: 2/11/2006 5:55:09 AM EDT
The wife here (being an accountant) tells me that a business can only claim a loss for 3 years running. We plan to look into the idea more. As soon as I get my C&R back I hope to. She is already looking at what is needed for it and if possible, I will be. I will pass on what I (she) can find.
Link Posted: 2/11/2006 6:14:23 AM EDT
In my dealings on the subject to deduct a percentage of your home, utilities exctra, you have have a room, area set aside for that use, if it is a spare bedroom it has to be set up as an office w/o a bed in it. But if you can it makes sense to do, I used to be a contractor and had very considerable deductions.

Justin
Link Posted: 2/11/2006 9:25:18 AM EDT
[Last Edit: 2/11/2006 9:25:48 AM EDT by boomfab]

Originally Posted By Rsteinb:
As soon as I get my C&R back I hope to.



I'd be careful with that one. The C&R is not meant for running a business.

Link Posted: 2/11/2006 9:34:56 AM EDT

Originally Posted By Hot-Lead:
It was suggested by our tax-preparer that we claim our hobbies as small-businesses..



Well, if your hobby makes money like a business, then that is fine.

However, if your hobby is just a hobby, the problem is that if you ever get audited then they will realize that and you WILL owe back taxes + penalties.

There are many cases people getting caught for claiming hobby expenses as business expenses. You ought to do some reading on the tax laws. www.irs.gov
Link Posted: 2/11/2006 9:36:26 AM EDT
[Last Edit: 2/11/2006 9:36:51 AM EDT by boomfab]

Originally Posted By Hot-Lead:

So, my question(s): Does it matter if you make a profit, or a loss by end-of-year? Would a (small) loss be more helpful?




You definitely want to show a profit!
Link Posted: 2/11/2006 12:29:24 PM EDT
I'm no tax expert either Scott, but if you are getting 0 or just a small refund that's the way you want it. IMHO and FWIW, it would probably be more of a hassle than it's worth to do what you're thinking about. All you might end up doing is paying more taxes and putting a target on your back for an audit down the road. I'm self employed, but contracted to one company. I’m very careful on my deductions. Mileage is my biggest, cell phone and some office supplies. These are all easy to prove and they are necessary expenses incurred, for me to do my job. I could probably claim a home office if I wanted to set one up, but I don't think it would be worth it. From what I've read and heard home offices are something that will flag returns at the IRS. You might keep track of everything this year and then figure both ways next year and see how it comes out.

Rick
Link Posted: 2/11/2006 11:47:54 PM EDT
Ok guys another question from a guy who NEVER does his owne taxes, how hard is it to do your self??? If not what is the best way to file your taxes??? thanks for any help.
Link Posted: 2/12/2006 5:37:22 AM EDT
TURBO TAX is your friend I have been using it for years and never had a single problem.
Link Posted: 2/12/2006 7:12:33 AM EDT

Originally Posted By sapper85:
TURBO TAX is your friend I have been using it for years and never had a single problem.



+1 on the Turbo Tax
Link Posted: 2/12/2006 11:45:29 AM EDT
I have a small local accounting firm do my taxes...$60 isn't that much more than Turbo Tax...

Rsteinb- The wife here (being an accountant) tells me that a business can only claim a loss for 3 years running

boomfab- You definitely want to show a profit!

Guys, who is right?
Link Posted: 2/14/2006 11:13:27 AM EDT
Turbo Tax is the on line thing right??? does it cost money???
Link Posted: 2/14/2006 4:17:04 PM EDT

Originally Posted By ak4784:
Turbo Tax is the on line thing right??? does it cost money???



You can do the online version or get the program most anyplace, i.e. Bestbuy, Circuit City, and Walmart. Either way it will cost you about the same. The biggest advantage to buying the program, at least it was that way, is that you can do other Family members taxes, too. I used the online version last year and it worked fine.

Rick
SGF, Mo.
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