Author Topic: Tax Question (Read 2778 times)

NOTHUMB · « **on:** January 06, 2009, 01:18:03 PM »

Got a check for $1870 from this past years Nationals. My question---what can I claim against the $1870?

Its not a profession and its considered a hobby---but can I claim the gas to get there, or the hotel room, or bowling balls cost against it?

I know this may be a stretch, just curious. I forget how I handled it in 2002 and other than that Ive always been around that $300 threshold or a little under.

Any thoughts and personal experiences would be appreciated----or if Im just screwed---you can say that too. Thanks.

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Only Losers Feel Pressure
www.myspace.com/crushgroovecg

the shadz · « **Reply #1 on:** January 06, 2009, 10:27:39 PM »

Gas, hotel, and food are all deductable. might want to have receipts just in case. Equipment I think is not, unless you can prove, if asked, that it was for that instance only.

Platinum Bowler · « **Reply #2 on:** January 06, 2009, 11:05:14 PM »

I claimed all of those including equipment last year, and it worked. You should just keep some receipts in case you do get audited.
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B-Car

ShoreLefty · « **Reply #3 on:** January 07, 2009, 05:57:47 AM »

Don't forget the $150 entry fee, and the money you spent to get in all of your brackets for Team, Doubles, and Singles even if your profit came from only one or two events. My guess is you made a little in all of them thugh. Also, I would say you could deduct money paid for parking as well.

Jorge300 · « **Reply #4 on:** January 07, 2009, 06:39:25 AM »

I always claim any and all expenses associated with the tournaments that created the income....gas, hotel/lodging, airfare, rental car, tournament entry fees, bracket entry fees, etc. Don't forget to include any expense or income from any of the side tournaments as well (BTM, BJI, RotoGrip Challenge). I have not included equipment since I use it for other things other then just the tournament that created the income.

And be prepared, just in case you didn't know, the 1099 you get from USBC will show all your gross winnings, so not net of your entry. Example you paid in $500 in brackets and made $1000 in team, paid $600 in D/S and made $400, your 1099 will show you won $1400, not that you made $300 profit.
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Jorge300

Rick Wunder · « **Reply #5 on:** January 07, 2009, 08:02:53 AM »

As already stated, you will get a 1099 for your $1870 plus any gross bracket and side pot winnings.

You can deduct your gas, tolls, parking, hotel, meals, and of course, as already posted, your entry fees and the money you put into brackets and side pots.

You are correct - since it is a hobby and not a profession, you can only deduct your expenses UP TO THE AMOUNT EARNED. In other words, you cannot take a loss. In your case, I doubt you'll have to worry about that, but I just thought you should know.
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RW (THB)

CPA · « **Reply #6 on:** January 07, 2009, 10:35:31 AM »

Here is how it should be handled. Report the total winnings on Schedule C. Then on the same schedule, deduct all of the expenses incurred to earn that income. Travel, lodging, entry fees, etc. I would not deduct equipment unless the equipment was only used in tournaments. Also include as an expense entry fees for tournaments you entered, but did not cash in. Clothing is only deductible if it can only be used for bowling. An example would be a shirt with a name on it.

I do not recommend reporting it as hobby income (loss). The expenses for a hobby are only deductible if you itemize and are limited to the income of the hobby. Also many states base their income taxes off the federal adjusted gross income. As a hobby, the income would be included in adjusted gross income, but the expenses would not be deducted from adjusted gross income.
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USBC Silver Level Coach

zonepro · « **Reply #7 on:** January 07, 2009, 10:43:00 AM »

Now if you do file a schedule C, don't you have to claim earnings in 3 of the last 5 years?

zonepro · « **Reply #8 on:** January 07, 2009, 10:44:46 AM »

Actually...let me rephrase...don't you have to show a profit in 3 of the last 5 years?

CPA · « **Reply #9 on:** January 07, 2009, 03:57:35 PM »

The profit in 3 of 5 years is a test not a requirement. If a Schedule C shows a profit in 3 of the last 5 years, the activity is presumed to be a business and not a hobby. If there isn't a profit in 3 of the last 5 years, the IRS could to try to assert it is a hobby and not a business. The taxpayer then needs to prove it is a business.

The first 2 years can show a loss without any question. After that, you need to prove your business intent.
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USBC Silver Level Coach

Jorge300 · « **Reply #10 on:** January 08, 2009, 09:23:22 AM »

quote:
Here is how it should be handled. Report the total winnings on Schedule C. Then on the same schedule, deduct all of the expenses incurred to earn that income. Travel, lodging, entry fees, etc. I would not deduct equipment unless the equipment was only used in tournaments. Also include as an expense entry fees for tournaments you entered, but did not cash in. Clothing is only deductible if it can only be used for bowling. An example would be a shirt with a name on it.

I do not recommend reporting it as hobby income (loss). The expenses for a hobby are only deductible if you itemize and are limited to the income of the hobby. Also many states base their income taxes off the federal adjusted gross income. As a hobby, the income would be included in adjusted gross income, but the expenses would not be deducted from adjusted gross income.
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USBC Silver Level Coach

If I may pick your brain a little here, without making you do too much work, since by your name here I imagine you usually get paid for this:

I live in Texas where there is no state income tax, would it make much of a difference if I claimed it as hobby income/loss versus using Schedule C?
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Jorge300

CPA · « **Reply #11 on:** January 09, 2009, 09:42:08 AM »

Jorge,

For you, the only difference it would make is if you itemize your deductions (Schedule A for mortgage interest, etc.) or if you had a loss. In a nutshell nothing good happens if you use the hobby loss rules. If you have a loss, it is not deductible, but if there is income it is taxable.
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USBC Silver Level Coach

Author Topic: Tax Question (Read 2778 times)

NOTHUMB

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the shadz

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Platinum Bowler

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ShoreLefty

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Jorge300

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Rick Wunder

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CPA

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zonepro

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zonepro

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CPA

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Jorge300

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CPA

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