been thinking about keeping all my expense receipts (Gas, tools, clothing, etc..) and all my scale receipts. Im just a hobbist, not a business as of right now. just don't wanna claim anything if im just gonna have to pay in when I file..
thanks!
Printable View
been thinking about keeping all my expense receipts (Gas, tools, clothing, etc..) and all my scale receipts. Im just a hobbist, not a business as of right now. just don't wanna claim anything if im just gonna have to pay in when I file..
thanks!
Nothing like announcing on a public forum that you are taking in unreported income.
If you have a normal 9-5, and you then claim added income with your scrap, its going to boost your income up and you will be taxed more per year. Unless you have a scrap business and have to file taxes, I would keep your scrap earnings on the DL. Just my 2 cents.
It's a legit question. You think he IRS cares if he claims 2k or not? I seriously doubt they will be searching on the forum for people like him.
You are probably correct resourseful. However, the people at the state level, at least here In SoDak lurk around Facebook and the local papers looking for people making a buck on the side. I know that for a fact, because my wife got a call from the SD Dept. Of revenue for listing one of her makeup parties on FB. She also has a friend who was breeding puppies that got hit up for making a buck on the side.Quote:
Originally Posted by ResourcefulRecycling
Nothing worse than a beurocrat with nothing better to do than harass honest people!
Where there is money involved big brother always has an eye open and a hand out.Quote:
Originally Posted by ResourcefulRecycling
I would look around for some free classes. It has always been the case with me that filling for taxes has always been better in the big picture. There are many deductions available for a home based company that are not available for an individual. Legal above board ways to save money/ taxes on things you are already doing.
There is a possibility that by maybe having to pay some company taxes, if when combined with your personal taxes you saved money and paid less taxes total. There are many good books about this.
Well now hold on a sec, until the first year I claimed scrapping on my taxes (as a reported income different than other jobs I ever had) I NEVER knew the difference between that reported income and income as a hobbyist. My understanding is that as a scrapper (self employed) you have to claim a plus 3 years out of 5, as a hobbyist you may have to pay taxes even on a loss. That is how my tax person explained it to me.Quote:
Originally Posted by KzScrapper
Also, it depends on (as a hobbyist) how much he takes in, if its under a certain amount you don't have to claim it or even if you do you will owe no taxes anyways.
Now, as far as the rest of the post goes I agree, but thats up to the OP, not us to decide.
I don't know about the rest of the posts (Big Brother lurking) as I've never had that happen nor ever heard of it happening to anyone I know so I offer no opinion there other than ..''really? they really do that??''
I'm in no way advocating for the OP since I don't have all the info but I'm just trying to look at both sides of the coin so to speak.
Each persons conscious has to go to bed every night.
that is a yes and no but there is a cost that could add up quickly. If you use your house as storage you take the sq footage that it takes up and its share of the power, water, gas use as well. You can put a price as "rent" as you see fit (does not have to be the monthly costs of rent). But again...best to talk to someone who knows accounting.Quote:
Originally Posted by Schwefel1995
^^And when you sell you would have to pay tax on the business part of the house you claimed.
OP, just because you claim the receipts there is no guarantee you get a refund, you might just break even and then you also have to claim every year after that for sure. Either as self employed or hobby depending on the income amount and the taxes are different.
What you do with taxes is your business. Me..I report my money. Don't need them coming back an bugging me. I enjoy staying off the radar. When I stop paying taxes I'll be changing my location to "An Island far far far out of reach of US Tax law. Pttbtbtbtbt!" Ha!
On the sharing on a public forum....While what Resourceful said is true, it's also true that more an more enforcement is being done via social media. Whether forums, Facebook, myspace(Does anyone still even use that?),or whathave you. Plenty of stories in the paper an on tv everyday about someone getting busted for sharing to much info via social media. Whether it's tax scoff laws, your everyday criminals, teachers going on a weekend bender an then posting it on a public section of FB, etc.
Big brother is always watching. To protect us you know. That's why they spy on people who play video games, tap several million conversations, try to install cameras at red lights an many public spaces..etc. Trick with taxes an not paying them is this...cheat an don't tell an you'll have no issues if your lucky. Cheat an brag about it an expect to be made an example of. ;)
Me..I pay. Then I tell them to go pound sand if they bother me any more. I dislike the IRS immensely. So I try not to be noticed by them in any shape, way or form. You go playing with the taxman expect to get bit.
Sirscrapalot - Let us never forget that government is ourselves and not an alien power over us. The ultimate rulers of our democracy are not a President and senators and congressmen and government officials, but the voters of this country. - FDR, same more in office don't know this...
Not true. When you claim part of the house as business use it acts like a month to month rent. Does not matter if you own the house the sq feet it uses has a value and since you are not using that part as a home but to make money..it can be added as a cost of the household. So when you sell..its your house you just "rented" part of it out to a company (your name) or if you took out a DBA then it would be under that name.Quote:
Originally Posted by newattitude
Also, you do not need a DBA or any license to start a company (in most counties/states) as long as your not using some name you came up with but your name as "jack joe" but need to look into zoning laws as that can be an issue in some cases.
I am not attorney and I am not CPA. Any advice I give is up to you to look into.
Quote:
Originally Posted by easyrecycle
This has not been my experience. When you sell a house, the tax return form clearly asks if you used any of it as a home office deduction. You can claim it was only rented to your business but the IRS will not buy that. If you do indeed rent it to your business, then you have rental income to claim and cannot deduct utilities. If you take the home office deduction each year then you have to report it when you sell your house. However, in my personal case, and they are all different, I found that my yearly deduction was greater than what it cost me at sale time.
As far as licensing requirements for a business go, it is different in each locality.
I am also NOT an attorney or an accountant.
I'm not an attorney but I am an accountant. The best answer that I can give is that it depends. It depends on your facts and circumstances, it depends on your intent, it depends on your record keeping (or lack thereof), it depends on whether you treat it as a business or whether you treat it as a hobby. I don't jump in much on tax questions due to this fact, because, it depends. This time I will add a few thoughts.
The tax code is written for people that own their own business. It is not written for people that have a job. Keep that in mind.
I will say that the 3 out of 5 year rule is a scare tactic. A tax practitioner with an good understanding of the rules knows that a legitimate business can and frequently will not always have a profit 3 out of 5 years. If you treat this like a business, report your gross sales and all of your legitimate expenses, it will help you IF you are ever audited in the future by showing that you were serious. If you don't treat this like a business, the reverse is true.
Is it reasonable for someone to deduct the expenses when they have a race car? It depends. Did they work to study the various classes that their car might fit into? Did they research what various tracks paid for prize money? Did they actively solicit sponsors? Did they search out advice from people that have been successful in the same types of racing? Did they win more prize money each year over a period of years and because of that become able to charge more for sponsorship placement on their car? Were they able to receive bigger discounts and/or free parts from national auto parts store chains? Did they hire mechanics with more skill than themselves? Did they move up to a different class to receive more prize money? And did they treat it like a business? Or, did they throw the car on the trailer on Thursday night, grab a cooler, a case of beer and a bag of ice on the way home from work Friday, jump in the truck and drive to the local track to drive in a race with their friends and then drink beer after the race? One is a business and one is a hobby. Keep this example in mind and apply it to any business idea that you have.
The answer always is, it depends. Keep records, take pictures, give business cards to everyone, and there will be no doubt that you have a business. If you use Google maps to look at my house, there is no doubt whatsoever that I have a scrap business. No one in their right mind would have a pile of, well I call it an inventory of non-ferrous raw material. My wife calls it my pile of junk.
Decide what you want to do and proceed. Just remember, it depends.
I figure my tax person knows what the rules are and thats what she told me, it would have to sell as part business and it depends on gains if you are excluded from reporting the sale.Quote:
Originally Posted by easyrecycle
This has a lot to do with South Dakota having no income tax. They get crazy about the sales tax. My company in Oregon only paid/filed one a year. Here we are doing it once a month.Quote:
Originally Posted by pjostYou are probably correct resourseful. However, the people at the state level, at least here In SoDak lurk around Facebook and the local papers looking for people making a buck on the side. I know that for a fact, because my wife got a call from the SD Dept. Of revenue for listing one of her makeup parties on FB. She also has a friend who was breeding puppies that got hit up for making a buck on the side.Quote:
Originally Posted by ResourcefulRecycling
Nothing worse than a beurocrat with nothing better to do than harass honest people!
As far as the OP something that has not be brought up yet is this. Things may be no big deal right now but what if you get a major score. Then you have to play catch up and it creates a lot of work for yourself.
Also you can't put it in the bank or invest. For me personally it wouldent take a genius to find extra income in an audit even 2k.
The IRS wanting you to report any and all income has nothing to do with if you are a hobby or a business...they want income reported regardless. The hobby or business declaration just sets which guidelines you are going to use for your deductions enabling you to whittle away at that reported income so that your Net Profit is little as possible.
Taxes suck but I pay and I sleep well.Here in Australia the tax department do check through sociail media also the news papers.Just to day I got a bill for importing a machine from china the goverment just charged me 17% of the value of the machine then on top of that another $1600 in gst then my broker charged me anouther 10% gst as well.This is just a part time buissiness for me to at this stage.I do want to keep what I have worked hard for I dont want the tax man on my door step .Lucky im aware of these charges and factored the cost in.For me honesty is the best policy, I dont like taxes but I do beleave what goes around comes around .Good luck