Taxes, Hobby Expense, Small Business, & Write offs

[Skip]

so at Yim11 g2g..

i was talking to a guy about how you can write off Discus hobby on your taxes.. so after alittle google.. i read that you can have a "small business" for more write offs.. !

so, question.. can you write off some expense on your hobby.. or have some of you started a small discus company out of your house for higher tax breaks..

thanks.. :)

[DiscusOnly]

so at Yim11 g2g..

i was talking to a guy about how you can write off Discus hobby on your taxes.. so after alittle google.. i read that you can have a "small business" for more write offs.. !

so, question.. can you write off some expense on your hobby.. or have some of you started a small discus company out of your house for higher tax breaks..

thanks.. :)



You can't write off hobby expenses unless you generated income. If you are not reporting the $5000 you made in selling discus frys, you can't claim the cost of the hobby. In other words, you can't claim a loss from hobby.

If you want to make it a small business.. get ready for a possible audit and I hope you have good record keeping. You are going to have to show that it's truely a business venture and not hobby. Remember, you are dealing with the IRS here.

I have written off hobby expenses before (not for discus) when I had 1099 issued for payments. For those years, I made sure I had a separate credit card to pay for anything possibly related to the hobby.

My advice. not something you want to explore without talking to a tax pro first. Remember.. it's the IRS

[Skip]

vlam.. i am not doing anything.. i am just asking.. since another hobbyist mentioned he wrote off some stuff.. so i was suprised by that.. and then when googgled topic.. some sites compared hobby expense vs small business.. so i am must asking.. thats what i do when i don't know the answer or want to know the answer ;)

[DiscusOnly]

That's why it's best to talk with a tax pro first. I am not saying that the hobbyist you spoke to is telling you to do something wrong.. everyone's tax situation is different but the guidelines are the same.

[Skip]

oh.. don't worry.. i was going to talk to my CPA also.. and see if he has ever heard of this :)

[Keith Perkins]

I'm a CPA but am a corporate accountant who doesn't deal with tax issues. If memory serves me correctly I believe discus "business" expenses can only be claimed up to the amount of the business income. Now there are things like loss carry forward and carry back to cross fiscal years, but I don't think there is any way you're going to be able to decrease none discus income with discus expenses. (Not saying that's what you're intending to do, just summarizing)

I only really learned 2 things in my tax class I took years ago:

1). Tax laws are complicated and constantly changing so if I ever made any REAL money I'd have a professional do my taxes. (I'm still doing my own)
2). The difference between tax omission and tax evasion...5 years.

[bronzie8]

I have a small Persian cattery with a tax ID number. I purchased several Discus, aquariums and supplies. I was able to deduct the fish, tanks and accessories when I had my taxes made out. I got my tax ID number online several years ago and was told I could use it for the cattery and Discus. I am setting them up to breed eventually, so it is considered a small business. Google tax ID number and you will find info. on how to apply.

[Keith Perkins]

I have a small Persian cattery with a tax ID number. I purchased several Discus, aquariums and supplies. I was able to deduct the fish, tanks and accessories when I had my taxes made out. I got my tax ID number online several years ago and was told I could use it for the cattery and Discus. I am setting them up to breed eventually, so it is considered a small business. Google tax ID number and you will find info. on how to apply.

My answer could have been better. If you have a business set up and you dive into discus as part of it you can certainly deduct discus expenses against say cat income. What I was trying to say is you can't just set up a business exclusively for discus and claim all your discus expenses in excess of income against your normal job W2 type income.

[DiscusLoverJeff]

Discus, Taxes, Hobby, Money. Sounds like the fun of a hobby is gone when you have to involve a taxman, Lol. I had a small business before and in order to really get a decent tax break I was told I needed a standing fixture (aka store front), so I did and although the tax break was nice, the payables didn't add up to any generated savings or returns. Be careful how you decide to approach this idea if you decide to try it.

Too many tax laws and breaks that an audit could come quicker than you think.

[calihawker]

The quick answer is yes. I have owned many businesses since I was 17 years old and have seen it and done it on every level but what I can say is you don't go into with a hobby mentality, you go into it with a sense of business. For example my latest venture involves falconry, hunting with birds of prey. Yeah its a hobby, an expensive one, so last year I formed a company called Tactical Avian Predators. I filed a fictitious business statement, I have a business plan with prospectus and I have every intention of hiring myself and my hawks out to keep nuisance birds away from airports, landfills, and vineyards. The startup costs are huge and there's no guarantee I will make a profit in five years but that's what a startup is all about and there's nothing illegal about it.

Starting a discus breeding company is not dissimilar. The critical thing is record keeping and have a top notch accountant. I have never done my own taxes. My record keeping is immaculate and I have no fear of an audit, I've been through 4 in the past 30 years. I'm expecting one any time now because I currently have 2 businesses showing a loss and 1 very profitable. Very complex bookkeeping.

I had to chime in because I hate when I hear this "fear the irs" talk. They work for YOU! You just need to learn the law and follow it. Of course it all comes down to how much of a hassle it is and what you save in the end.

Steve-O

[Skip]

I had to chime in because I hate when I hear this "fear the irs" talk. They work for YOU! You just need to learn the law and follow it. Of course it all comes down to how much of a hassle it is and what you save in the end.

Steve-O

i worked for IRS for 1 season.. and learned first hand that the IRS will bend over backwards to help people out.. IN FACT.. people sent in Signed Tax forms, with W2s attached.. but were BLANK!!!! i asked if i should send it back.. my super told me. NOPE.. it would get filled in down the chain.. LOL!! crAZY!! i was blown away by that!! :))

thanks for info.. i am not planning on starting anything.... yet ;)

but i just wondering that thoughts of others :)

ps..

we need your hawks here in AUSTIN!!! the stupid GRACKLES ARE A PAIN!!

[Jennie]

Skip..if you use your home or a portion of it for business you have to file this way for 10 years...if not youll end up paying back taxes to the irs

[calihawker]

Skip..if you use your home or a portion of it for business you have to file this way for 10 years...if not youll end up paying back taxes to the irs

Yes, and you have to show a profit after 5 years even if its only a dollar.
As a side note you can start a corporation, S or C or an LLC in 20 minutes or less for $99.00


Steve-O

[Skip]

Yes, and you have to show a profit after 5 years even if its only a dollar.
As a side note you can start a corporation, S or C or an LLC in 20 minutes or less for $99.00


Steve-O

WHAT?!?! T.M.I.! :) lol