Tax deduction!

[javajoe]

I was doing my taxes with "Turbo tax" last night, and since we own our home, i itemize. I found out that you can actually claim a deduction for a hobby! who knew! we spent enough to actually deduct about $200 from our taxes!
I guess we need to make sure to spend a LOT MORE this year, so we can have a higher deduction next year.

 

[underthesea]

Damn I just got my taxes back and had them done professonly(sP) I wish I new that befor ethey never ask you things like that when you get them done. Is that with every state you can do that?

 

[johnnysalt]

He's probably talking about federal taxes. I used turbo tax too but I didn't take the "hobby" tax credit b/c I didn't spend enough. The total amount you spent with the hobby would have to be more than 2% of your adjusted gross income in order to be deductible.
Not trying to bust bubbles, just letting you know ahead of time!

 

[underthesea]

Well i know I spent more then 2% of my gross easily I probably spent about 20% on supplies and live stock. Damn I will have to waite till next year

 

[kelly]

File an ammended return.

 

[wingman]

Just talked to my accountant about this and he said I can only claim money spent on a hobby if I am making money off of it. Do you have any more information on this that I could tell him?

 

[fishfood]

start fragging some coral and selling them if that is the case. Sell them to the lfs for a few bucks.

 

[javajoe]

Ooops. Guess i'll sell a shrimp to my neighbor to throw on his BBQ

 

[javajoe]

after reading the responses to my original post, i did some diggin on the IRS webstie and found that in fact, you can't deduct from a hoby unless you are profiting from said hobby. Here is the info from the IRS website:
"You must report all of your hobby income on line 21 of Form 1040. A hobby is defined as an activity not engaged in for profit.
You may be entitled to certain hobby deductions, but only up to the amount of income reported for each hobby. However, there are other limitations as well. For additional information, refer to Publication 535, Business Expenses. Publication 535 </pub/irs-pdf/p535.pdf> is available for download, or you may request a copy by calling 1-800-829-3676. "
Figures--- it was too good to be true.... guess i gotta go back and redo that part

 

[bagofsalt]

This post is quite interesting. I have read this publication from IRS (about the hobby thing) but I'm not sure how to explain it. Here's the PDF link and its on page 5 Not-For-Profit Activities.
<a href="http://www.irs.gov/pub/irs-pdf/p535.pdf" target="_blank">http://www.irs.gov/pub/irs-pdf/p535.pdf</a>
Any credible explanation is welcome. I didn't file my return yet so I thought I like to hear some opinion first.
Thanks,
Reuben.

 

[chevron tang]

that's a new one on me.

 

[sheracr123]

The deduction for hobby expense is there to offset money made in a hobby. ( I used to work for H&R Block.) I also use the deduction in my other hobby.(What??? There's something other than fish??? <img src="graemlins//eek.gif" border="0" alt="[eek]" /> ) Occasionally I get lucky at the track and actually win a few races, some of which have $5000.00 purses. Thus the track would issue me a 1099 misc. which is fully taxable. I could then deduct up to $5000.00 in expenses taking in the 2% limitation.

 

[sheracr123]

In other words, you can only deduct up to the amount you make.

 

[broomer5]

I used Turbo Tax this year too, and came across that hobby deduction stuff.
Tell ya the truth - I passed on it - don't want to throw up any more red flags than I'm sure I already do. Plus it did not seem applicable to my situation.
But man for a second there ..... I was already dreaming of 2002 reef tank purchases