Tax Deductions Hobby
July 5th, 2009
Tax Deductions Hobby
Question: Are you a civil war reenactor?Do you know how to claim your expenses as a tax exemption or deduction?
‘05 was my first year in the Hobby and everyone tells me this can be done but no one seems to know how..
Answer: I’m not an expert but:
I think that, according to IRS rules, if you engage in you hobby without expecting to make a profit (as I thnk would be the case) you cannot take a deduction other than — you report any profits made, but can deduct losses up to the amount of the profit. You cannot deduct against other unrelated income.
These are from IRS publications related to hobbies:
“Activity not for profit. You must include on your return income from an activity from which you do not expect to make a profit. An example of this type of activity is a hobby or a farm you operate mostly for recreation and pleasure. Enter this income on Form 1040, line 21. Deductions for expenses related to the activity are limited. They cannot total more than the income you report and can be taken only if you itemize deductions on Schedule A (Form 1040). See Not-for-Profit Activities in chapter 1 of Publication 535 for information on whether an activity is considered carried on for a profit.”
“Hobby losses. Losses from a hobby are not deductible from other income. A hobby is an activity from which you do not expect to make a profit. See Activity not for profit, earlier.
If you collect stamps, coins, or other items as a hobby for recreation and pleasure, and you sell any of the items, your gain is taxable as a capital gain. (See chapter 16.) However, if you sell items from your collection at a loss, you cannot deduct the loss.”
Tax Tips & Information : Are Hobby Expenses Deductible Under Federal Income Tax Laws?
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