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Anyone have their team set up as a business for tax purposes? Could this help recoup costs assuming you weren't winning every week??
DISCLAIMER - (I deliver babies.. not tax forms)
Seems like there is a tax rule that you can only show a loss in a "business" for a limited number of years before it becomes a "hobby" and you can't deduct a loss on a "hobby"... But i think you can still offset winnings with documented expenses.
Maybe some tax professional can chime in...
It's a hobby so you can offset expenses against income. Just can't take a loss. No need to incorporate. Just keep receipts and fill out the IRS form.
I am a tax pro. I dont/wont offer tax advice here. However, this IS the correct answer. Unless you're actually a caterer, etc. and this is a business, there is no need to LLC, etc. However, like Civil said above, IF you are a caterer or in the restaurant business, you may want to do it for any number of reasons; he gave a good one.
All expenses, gas, mileage, rubs, fuel, meat, entry fees, etc. etc. etc. can be used to offset any winnings. Very few teams, when you factor in ALL the costs, actually have to report $$$ income.
Very few teams, when you factor in ALL the costs, actually have to report $$$ income.
You can claim hobby expenses up to the amount of reported income...however, hobby expenses are subject to the 2% of AGI restriction. Assuming you did have any other 2% deductions you would pay tax on your winnings - up to 2% of your AGI.
...At least that is the way I read the form and instructions.
I am a tax pro. I dont/wont offer tax advice here. However, this IS the correct answer. Unless you're actually a caterer, etc. and this is a business, there is no need to LLC, etc. However, like Civil said above, IF you are a caterer or in the restaurant business, you may want to do it for any number of reasons; he gave a good one.
All expenses, gas, mileage, rubs, fuel, meat, entry fees, etc. etc. etc. can be used to offset any winnings. Very few teams, when you factor in ALL the costs, actually have to report $$$ income.
I won $750 at a comp last year and my tax folks said I couldn't deduct expenses because they had to be over some percentage of income or something or other gobbledy gook like that. What Meathead said here sounds something like what I was told. But I had to pay on the whole $750 and couldn't deduct chit! :tsk: