Hobby or business?

[Chocaholic]

Originally Posted by Shaun @ Tru6

just pay the taxes. why is that even a question.

This. It’s the law. She’ll only owe taxes if she’s making money. That’s a good thing. Pay what you owe and sleep at night. I’m amazed how many here would do otherwise.

Dave’s thread about getting stiffed by a Pelican is making more sense now.

[KFC911]

Pay yer taxes, stay below the radar, or become friends with Trump....pardon me, but them's the rules .

[legion]

If you are making money, it is a business and Uncle Sam wants his cut.

If you are losing money, it's a hobby and Uncle Sam says you can't deduct anything.

[drcoastline]

Originally Posted by Shaun @ Tru6

just pay the taxes. why is that even a question.

Insite of my post. This is the correct answer.

Take your deductions pay taxes on the profit. It's a good thing. It reminds me of something I heard a long time ago. A man didn't play the lottery because he didn't want to pay taxes on his winnings.

Good post Shaun.

[A930Rocket]

My thoughts were not to cheat the IRS out of taxes (even though I pay plenty), but what constituted a business and a hobby. I don't know what the threshold is. Having done this for only a few months, I haven't really paid attention to her activity. I'm more focused on her getting a job after spending all that money for her doctorate. When she does start work, her outside activity will just about be nil.

I did a quick look at her "expenses" and her "deposits" today. Just about every week she deposits $1K. Sometimes a little more. And a really good week would be $1.5K, but this rare. Her expenses are more than the $200 I mentioned. She has the cost of the furniture, which can be $25 to $100+ for each piece, plus her paint, sandpaper, knobs screws, gas to travel, her time, etc.

She's not making what she thinks she's making, but I haven't told her that. Happy wife, happy life. It's still something, but she works seven days a week, between shopping for furniture, painting it and selling it. She only accepts cash because she doesn't know how to use Venmo, Paypal, etc. Cash is just easier for her. She is not going to try and write anything off on taxes, but she really needs to start documenting what she's spending on furniture, material, gas, etc and what she's selling the items for.

[ckcarr]

She's probably not making as much as she thinks. As a CPA, I would see these little hobby business that seem to evolve into break-even or worse. Or, she may be making far less on an hourly level than realized. But, it gives a person something to do, and if they enjoy it so what. Hopefully she's not accumulating a bunch of nick-knack inventory... Which is a different story. The other thing seems to be that when an enjoyable hobby becomes a business, then it often ceases being fun.

I'd get a copy of Quickbooks and start tracking everything. See where it shakes out in the long run.

[greglepore]

As far as the IRS is concerned, there is no "threshold"." Any income from whatever source derived" is taxable. Hobby losses are another thing entirely. To be above board and legal, though, often takes as much effort as the "hobby" in terms of tracking expense, and a sched C increases audit odds.

[sammyg2]

Originally Posted by Amail

As long as you don't post expenses and deposits on a public forum, you should be fine.

LOL, beat me to it