iHaveNet.com
Personal Finance - Deducting Hobby Expenses: Think Business
Online Breaking News Headlines Single Source to Headlines Breaking News Current Events Top Stories. Find out what is happening in News & the World. Check out iHaveNet.com for the latest news & current events articles plus Movie Reviews, Wolfgang Puck Recipes, NFL Previews Analysis and Politics. Your Single Source to News Articles, Current Events & Reviews.
  • HOME
  • WORLD
    • Africa
    • Asia Pacific
    • Balkans
    • Caucasas
    • Central Asia
    • Eastern Europe
    • Europe
    • Indian Subcontinent
    • Latin America
    • Middle East
    • North Africa
    • Scandinavia
    • Southeast Asia
    • United Kingdom
    • United States
    • Argentina
    • Australia
    • Austria
    • Benelux
    • Brazil
    • Canada
    • China
    • France
    • Germany
    • Greece
    • Hungary
    • India
    • Indonesia
    • Ireland
    • Israel
    • Italy
    • Japan
    • Korea
    • Mexico
    • New Zealand
    • Pakistan
    • Philippines
    • Poland
    • Russia
    • South Africa
    • Spain
    • Taiwan
    • Turkey
    • United States
  • USA
    • ECONOMICS
    • EDUCATION
    • ENVIRONMENT
    • FOREIGN POLICY
    • POLITICS
    • OPINION
    • TRADE
    • Atlanta
    • Baltimore
    • Bay Area
    • Boston
    • Chicago
    • Cleveland
    • DC Area
    • Dallas
    • Denver
    • Detroit
    • Houston
    • Los Angeles
    • Miami
    • New York
    • Philadelphia
    • Phoenix
    • Pittsburgh
    • Portland
    • San Diego
    • Seattle
    • Silicon Valley
    • Saint Louis
    • Tampa
    • Twin Cities
  • BUSINESS
    • FEATURES
    • eBUSINESS
    • HUMAN RESOURCES
    • MANAGEMENT
    • MARKETING
    • ENTREPRENEUR
    • SMALL BUSINESS
    • STOCK MARKETS
    • Agriculture
    • Airline
    • Auto
    • Beverage
    • Biotech
    • Book
    • Broadcast
    • Cable
    • Chemical
    • Clothing
    • Construction
    • Defense
    • Durable
    • Engineering
    • Electronics
    • Firearms
    • Food
    • Gaming
    • Healthcare
    • Hospitality
    • Leisure
    • Logistics
    • Metals
    • Mining
    • Movie
    • Music
    • Newspaper
    • Nondurable
    • Oil & Gas
    • Packaging
    • Pharmaceutic
    • Plastics
    • Real Estate
    • Retail
    • Shipping
    • Sports
    • Steelmaking
    • Textiles
    • Tobacco
    • Transportation
    • Travel
    • Utilities
  • WEALTH
    • CAREERS
    • INVESTING
    • PERSONAL FINANCE
    • REAL ESTATE
    • MARKETS
    • BUSINESS
  • STOCKS
    • ECONOMY
    • EMERGING MARKETS
    • STOCKS
    • FED WATCH
    • TECH STOCKS
    • BIOTECHS
    • COMMODITIES
    • MUTUAL FUNDS / ETFs
    • MERGERS / ACQUISITIONS
    • IPOs
    • 3M (MMM)
    • AT&T (T)
    • AIG (AIG)
    • Alcoa (AA)
    • Altria (MO)
    • American Express (AXP)
    • Apple (AAPL)
    • Bank of America (BAC)
    • Boeing (BA)
    • Caterpillar (CAT)
    • Chevron (CVX)
    • Cisco (CSCO)
    • Citigroup (C)
    • Coca Cola (KO)
    • Dell (DELL)
    • DuPont (DD)
    • Eastman Kodak (EK)
    • ExxonMobil (XOM)
    • FedEx (FDX)
    • General Electric (GE)
    • General Motors (GM)
    • Google (GOOG)
    • Hewlett-Packard (HPQ)
    • Home Depot (HD)
    • Honeywell (HON)
    • IBM (IBM)
    • Intel (INTC)
    • Int'l Paper (IP)
    • JP Morgan Chase (JPM)
    • J & J (JNJ)
    • McDonalds (MCD)
    • Merck (MRK)
    • Microsoft (MSFT)
    • P & G (PG)
    • United Tech (UTX)
    • Wal-Mart (WMT)
    • Walt Disney (DIS)
  • TECH
    • ADVANCED
    • FEATURES
    • INTERNET
    • INTERNET FEATURES
    • CYBERCULTURE
    • eCOMMERCE
    • mp3
    • SECURITY
    • GAMES
    • HANDHELD
    • SOFTWARE
    • PERSONAL
    • WIRELESS
  • HEALTH
    • AGING
    • ALTERNATIVE
    • AILMENTS
    • DRUGS
    • FITNESS
    • GENETICS
    • CHILDREN'S
    • MEN'S
    • WOMEN'S
  • LIFESTYLE
    • AUTOS
    • HOBBIES
    • EDUCATION
    • FAMILY
    • FASHION
    • FOOD
    • HOME DECOR
    • RELATIONSHIPS
    • PARENTING
    • PETS
    • TRAVEL
    • WOMEN
  • ENTERTAINMENT
    • BOOKS
    • TELEVISION
    • MUSIC
    • THE ARTS
    • MOVIES
    • CULTURE
  • SPORTS
    • BASEBALL
    • BASKETBALL
    • COLLEGES
    • FOOTBALL
    • GOLF
    • HOCKEY
    • OLYMPICS
    • SOCCER
    • TENNIS
  • Subscribe to RSS Feeds EMAIL ALERT Subscriptions from iHaveNet.com RSS
    • RSS | Politics
    • RSS | Recipes
    • RSS | NFL Football
    • RSS | Movie Reviews

Deducting Hobby Expenses: Think Business
Robert Pagliarini

HOME > WEALTH

 

SocialTwist Tell-a-Friend

Hobbies are a great way to spend the other eight hours, but they are terrible from a tax perspective. Why? You are not allowed to deduct hobby expenses for tax purposes. This makes sense. If you could deduct hobby expenses, almost everything would be deductible -- trips to the zoo, your subscription to Professional Photographer magazine, even that new digital camera you've had your eye on. If it's a hobby expense, the IRS says NO. But is there a way to legally deduct those expenses and many more? The IRS says YES. Stop thinking hobby and start thinking business.

Hobby expenses are not deductible, but if you can turn your photography hobby into a legitimate business, you can deduct the zoo tickets, magazine subscription, camera and much more. Let's take this slow, because you don't want to take deductions for which you do not qualify.

Three rules for deducting expenses:

1. Expenses must be for a trade or business. OK, but what makes something a trade or business? The IRS says "an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit." The last part is important. There must be a reasonable expectation of earning a profit. That means there must be a good chance you'll make more money with your venture than you spend. According to this definition, my 4-year-old's lemonade stand may be more of a business than, say, the recent "Cop Out" movie. Still not sure if you have a hobby or a business? The IRS suggests you consider these factors:

-- Does the time and effort put into the activity indicate an intention to make a profit?

-- Do you depend on income from the activity?

-- If there are losses, are they due to circumstances beyond your control, or did they occur in the start-up phase of the business?

-- Do you have the knowledge needed to carry on the activity as a successful business?

-- Have you made a profit in similar activities in the past?

-- Does the activity make a profit in some years?

2. Expenses must be ordinary for conducting business. This means the expense is common and accepted in your particular trade or business.

3. Expenses must be necessary for conducting business. A necessary expense is one that is appropriate for the business.

How does this work in the real world? If your passion is photography, why not turn what you love into a business? Could you make money -- scratch that -- could you make a profit from your passion? Of course you could.

I was at the San Diego Zoo recently and spoke to a half-dozen photographers snapping photos around the lion attraction. They all had a few things in common. They loved photography. They were creating something in the other eight hours. They had other jobs. And they had a side photography business. I didn't get into their finances -- my daughter was more interested in the animals than the going price of an 8 x 10 lion photo -- but my guess is that they all could have deducted what they paid to get into the zoo, any photography magazines or journals to which they subscribe, and even new cameras and equipment. If they can do it, there's no reason why you can't turn your passion into a business and deduct the expenses.

A few disclaimers and words of caution. I am not a CPA. Talk to your professional tax advisor regarding your own situation. Don't deduct expenses that are not legitimate -- the U.S. deficit doesn't need tax cheats. Keep detailed records. Read more about hobby and business expenses from the IRS. Don't try to feed the lions.

 

SocialTwist Tell-a-Friend

 

  • 21 Ways to Cut Expenses in Retirement
  • New Frugality Emerging for Retirement
  • Gen Y to Banks: Do Better
  • Deducting Hobby Expenses: Think Business
  • Sadly Bad Advise Abounds on Roth IRA Conversions
  • Medigap Plans Cooking Up New Alphabet Soup
  • Identity Theft May Be Prelude to More Serious Crime

 

Personal Finance - Deducting Hobby Expenses: Think Business

(c) 2010 Robert Pagliarini. Your Other 8 Hours

Search Powered By Google

Google Search   

Job & Career Search

career & job search                    job title, keywords, company, location

ADVERTISEMENT

Advertisement

Advertisement

Your Ad Here
Your Ad Here

ADVERTISEMENT

Advertisement

Your Ad Here
Your Ad Here
  • HOME
  • WORLD
  • USA
  • BUSINESS
  • WEALTH
  • STOCKS
  • TECH
  • HEALTH
  • LIFESTYLE
  • ENTERTAINMENT
  • SPORTS

 

Personal Finance - Deducting Hobby Expenses: Think Business

  • Services:
  • RSS Feeds
  • Shopping
  • Email Alerts
  • Site Map
  • Privacy