The “hobby” classification on a tax return can spell death for deductions. What can you do about it?
- Quit your hobby
- Make your hobby a business
If you don’t choose number 2, you could wind up paying taxes even when your hobby produces zero income. Want to avoid this dangerous tax trap? Read my brand new article titled Tax Tips: Horse Hobby Needs Tax Psychiatric Review.
Three ways our fact-filled article can help you:
- We’ll list the three cash-draining provisions that can bite you. It’s worth getting my article for this information alone. If you’re spending significant money on a hobby, I urge you to read the full article.
- We’ll provide a concrete example that makes everything clear. Consider the case of Mr. Henry Miller. Raising horses was his passion. On his tax return, he reported his hobby this way: $90,000 as miscellaneous income and $90,000 as an itemized deduction. Thanks to the Alternative Minimum Tax, Mr. Miller wound up paying $30,516 in taxes on an activity that lost money! Don’t let this happen to you! Read the full article.
- We’ll show you how to stay out of trouble. In its regulations, the IRS gives you nine “honest-effort indicators” of profit motive. We’ll list them all when you read the full article.