It’s no fun when your side business loses money. However there is a bright side. You can generally use your losses to offset other income or apply the losses to lower your income taxes.
But be careful. If you don’t handle things the right way, the IRS might:
- Invoke the “hobby loss rule”
- Claim that you’re running your side business as a hobby
- Prohibit you from deducting your business losses
- And ding you for a lot of extra taxes
Want to stay out of trouble with the IRS (and who doesn’t)? Check out my new article titled Tax Tips: Doctor’s Amway Business Ruled a Sham.
Three ways our fact-filled article can help you:
- You’ll learn how to avoid the fate of Dr. Mikhail. Pity the poor doctor. He broke a number of the hobby loss rules and paid the price. A huge price! You’ll find out where he went wrong and how to avoid the problems he faced when you read the full article.
- We’ll tell you what the IRS is looking for. The IRS checks nine factors to determine if an activity is really for profit or is merely a hobby. We’ll tell you what they are when you read the full article.
- You’ll learn how to keep your side business from looking like a hobby/tax shelter. There are three basic things you need to do to keep the IRS at bay. We’ll list them for you when you read the full article.