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About Self-Employed Federal Income Tax Deductions
About Tax Deductions for a Hybrid Car Purchase
About Tax Deductions for College
About W4 Tax Withholding Forms
Are Disability Benefits Taxable?
Are Hobby Expenses Deductible Under Federal Income Tax Laws?
How Do Tax Write-Offs Work?
How to Calculate Federal Income Tax to Pay to the IRS
How to File a Tax Return
How to File Late Taxes
How to File Tax Returns in 2 States
How to File Taxes for Previous Years
How to File Taxes for Years Missed
How to File Taxes on Benefits
How to File Extra Income Taxes
How to Find Tax Forms & Instructions
How to Get a Copy of Last Year's Taxes
How to Pay Taxes on Side Income
How to Revoke a Child Tax Deduction
How to Use Legal Fees as a Tax Deduction
Net Income Tax Liability Definition
Penalties for Not Filing Income Tax
Tax Deductions for Business Use of a Car
Tax Deductions to Run a Business at Home
What to Claim on Income Taxes
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Summary: Hobby expenses are deductible under federal income tax laws if the hobby has been turned into a sideline business that can show a profit for three of the past five years. Take deductions for a hobby up to the amount of the gross receipts with information from a tax consultant in this free video on taxes.
Ken Lewellyn is co-founder of Tennessee Business Services, Inc., a Tennessee bookkeeping, tax and consultant firm which provides bookkeeping, tax and business advisory services to...read more
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"Hi, we're here to talk about hobby expenses and whether or not they're deductible under the federal income tax. The first question is, "Is your hobby a hobby, or are you really running it like a business?" If you have transformed your hobby into a sideline business for instance, you can deduct your expenses if they are reasonable and customary expenses and if you're running your hobby business with the intent of making a profit. Typically the IRS says that you need to make a profit three out of the last five years. That's kind of their standard guidelines. So if you are running it like a business, you're attempting to make a profit, and you can show a profit even a small profit, three out of the last five years, then you're entitled to take reasonable and customary expenses such as mileage, home office, whatever would be applicable to that industry that you're competing in. If your hobby isn't run as a business and it isn't a for profit operation, you are entitled to take deductions up to the amount of your gross receipts, meaning if you took in ten thousand dollars in receipts and you had expenses that totaled twelve thousand, you could only take the ten thousand in expenses that would match the gross receipts of ten thousand and those expenses would have to be reasonable and customary and meet the IRS guidelines."
eHow Article: Are Hobby Expenses Deductible Under Federal Income Tax Laws?
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