Pat McSwain
Banned
- Joined
- Jan 25, 2010
- Messages
- 27
While I think it proves our tax laws are written by chimpanzees (not the top of their class either), like it was said above, you do not need to open a business to zero out minor hobby income.
You will only run afoul of the taxman if you declare losses in your hobby business that reduce your "real" net income.
This is common for many people when they win minor money gambling. If you document your gaming loses and report them, it zeros out the winnings. You can't declare a loss legally, nor are you required to pay taxes on the winnings if you are upside down.
But be careful what you declare as costs for racing. Food and lodging can be gray area. Entry fees for the year and association fees are the safest, and you should start there. Only if your winnings exceed those fees should you add other expenses, and I'd start with race parts, then fuel, then finally personal expenses.
You will only run afoul of the taxman if you declare losses in your hobby business that reduce your "real" net income.
This is common for many people when they win minor money gambling. If you document your gaming loses and report them, it zeros out the winnings. You can't declare a loss legally, nor are you required to pay taxes on the winnings if you are upside down.
But be careful what you declare as costs for racing. Food and lodging can be gray area. Entry fees for the year and association fees are the safest, and you should start there. Only if your winnings exceed those fees should you add other expenses, and I'd start with race parts, then fuel, then finally personal expenses.