I prefer a proper burial in the back yard along with a nice bonfire .Yup! Between that and all the a$$holes you need to deal with while trying to sell something, I’ve either been giving it away, or throwing it out.
I prefer a proper burial in the back yard along with a nice bonfire .Yup! Between that and all the a$$holes you need to deal with while trying to sell something, I’ve either been giving it away, or throwing it out.
This is a common misconception. It makes sense that deductions should only be for businesses that intend to make a profit and pay taxes on that, the IRS might even tell you this is the case but it's not true.You can only deduct expenses if it is being run as a business for profit. If the IRS determines it’s a hobby business, then you can’t deduct expenses, but you still need to report revenue, and pay taxes on that. But, your advice stands, talk to your accountant to see what you qualify for.
Clearly a case of an agency just trying to implement the law as it's written. We're getting dangerously close to politics, but that fact we have one group trying to kill the agency while the other is trying to give it the tools to do it's job is a sorry situation.This is a great example of extremely poor planning. The reporting threshold for employers was set at $800 in 1917, about $19,000 in 2023. Some brainiacs thought it was a good idea to lower this amount to $600 in 2021...
Clearly very little thought was put into this since they are also trying to get cash apps like Venmo and Paypal to also make these declarations. My wife makes coffee runs for the hospital on her break (she works in the ER), she is often repaid through apps like Venmo so receives $40-60 a week in repayment which means she could have to do paperwork showing that the payments were just repayment for being a nice person and picking up coffee for her co-workers, it is not income.
A whole lot of not thinking occurred here. Supposedly the IRS has postponed the implementation because they got buried in millions of additional nickel and dime 1099s that they were not prepared for. They can barely manage the current work load without adding this to the pile of tasks.
It’s not a misconception, your father was running it as a business, so he was able to take his deductions, just like the big corporations you mentioned. I didn’t say you had to be making a profit, just that you are running it for profit. The IRS considers a for profit business as a legitimate business that gets deductions, but if you are doing it for fun, and would be doing it anyways, that might not be considered for profit and get classified as a hobby business. My warning was don’t assume you can deduct whatever you want if this is just a hobby. You’ll probably get away with it for a while, but one day it might come back to bite you. I’m on my third business, and I do my own taxes, and haven’t been running a profit lately, so I have been studying the tax code for small businesses for several years, but I’m not an accountant, so you don’t have to take what I say as gospel eitherThis is a common misconception. It makes sense that deductions should only be for businesses that intend to make a profit and pay taxes on that, the IRS might even tell you this is the case but it's not true.
As long as you maintain the proper licenses, and file your taxes truthfully you don't actually have to make a profit in business. In fact, there are many multi-national corporations that loose money every year in very creative ways and successfully manage to minimize their tax obligations to effectively zero.
My dad taught me about this, he was a math guy with an interest in the law. Every year he would read the tax code and do his own taxes. He also never saved receipts for his business since it was permitted to estimate expenses. He ran a business for well over a decade and never declared a profit. He was audited three times, once he had to pay, twice the government gave him a refund.
I also ran businesses for many years and only turned a profit one of them. Nobody ever asked if my business was a hobby even though I was involved in racing go-karts which is definitely a hobby for most people in the business.
Of course, don't take anything I say as gospel. Consult with an accountant and attorney if necessary.
John
My point is you get to determine if it's a business, not the IRS. People are often intimidated by the words but really, if you're taking in a little side work you're a business even if you think you're not. Protect yourself by getting good professional advice, there are a lot of us out here who have done it and can encourage those who think it might be the right thing for them....It’s not a misconception, your father was running it as a business, so he was able to take his deductions, just like the big corporations you mentioned. I didn’t say you had to be making a profit, just that you are running it for profit. The IRS considers a for profit business as a legitimate business that gets deductions, but if you are doing it for fun, and would be doing it anyways, that might not be considered for profit and get classified as a hobby business. My warning was don’t assume you can deduct whatever you want if this is just a hobby. You’ll probably get away with it for a while, but one day it might come back to bite you. I’m on my third business, and I do my own taxes, and haven’t been running a profit lately, so I have been studying the tax code for small businesses for several years, but I’m not an accountant, so you don’t have to take what I say as gospel either
My point is you get to determine if it's a business, not the IRS. People are often intimidated by the words but really, if you're taking in a little side work you're a business even if you think you're not. Protect yourself by getting good professional advice, there are a lot of us out here who have done it and can encourage those who think it might be the right thing for them....
John
P.S. if you're running a business and it's not fun, you should probably go to work for someone else unless it pays at least 3 times what you would make as an employee.