There are many unfair IRS rules that badly hurt taxpayers. Perhaps the worst of the lot are the “hobby loss” rules. Here’s the story…
If your business has produced losses in multiple years, you’ll want to use these losses to offset your other taxable income.
But if the IRS decides your business really isn’t a business at all, but instead is a mere “hobby,” you’ll lose your tax-loss deductibility and then, on top of that, you could wind up paying additional taxes when the IRS takes away some or all of those deductions.
This can get so bad that you are taxed on all of the income and granted zero deductions!
Want to avoid turning a huge monetary loss into a massive tax liability?
Read my new article titled Tax Tips: Three Strategies to Beat the Hobby Loss Rules!
Three strategies we’ll explain in our fact-filled article:
Strategy #1: Provide the right kind of documentation. The IRS will want to see a business plan, budget, estimate of revenues and expenses, and more. We’ll tell you how to provide the documents the IRS will put under the microscope when you read the full article.
Strategy #2: Seek competent business advice. If your business has been generating losses for several years, the IRS will want you to show that you sought help from accountants, financial advisors, and others who could help your business become profitable. You’ll get all the details when you read the full article.
Strategy #3: Record the time you spend working on your business. You’ll want to provide the IRS with a journal and/or a time sheet that documents tasks like contacting prospects and marketing your products. All will be explained when you read the full article.