Fed Income Tax Question

[Swimalie]

I think you would be a little surprised..

I wrote of 100% of the cost of an $8K lawnmower because I mow a few cemeteries, also use it to mow our yard..

How many people write of 100% of their internet and cost of computer and sit here at DIS half the day??

And endless other examples..

You should figure out the percentage of time you mow the lawns of cemeteries and then you write off that amount. You can't write off something 100% a as business expense unless it is used 100% of the time for only for the business. If you used the lawn mower for your home use, then you shouldn't have written it off as 100%. And remember, the IRS can audit you for up to 7 years later. Same for internet use at a home office. I have a home office. Before I had my son, I was working a lot more on my business, I wrote everything off relating to the office (space, phone, heat, AC, internet, etc) as a percentage of time or space used. This was all under the direction of my accountant.

Hobbies can't be written off and pets can't be written off either. They were just on Fox News talking about this. It would be nice because then I could write off my thousands I spend on swimming each year.

 

[Cheshire Figment]

You are entitled to deduct expenses related to a hobby up to the amount of income from the hobby.

I have a client who actually collects rocks. He will sometimes go to shows and sell to other collectors. He reports the income from the sales and deducts expenses related to this on a Schedule C. Since it is a hobby and not his primary source of income the net income from thisd is not alowed to go below zero.

 

[Vijoge]

Frim www.irs.gov

Hobby Expenses
You can generally deduct hobby expenses, but only up to the amount of hobby income. A hobby is not a business because it is not carried on to make a profit. See Not-for-Profit Activities in chapter 1 of Publication 535.

Now the way I understand this is Joe makes birdhouses as a hobby. He bought the wood, tools, paint, etc and made 20 birdhouses last year which he then sold (because he really doesn't need 20 birdhouses) for $20 each. He reported this $400 as income to the IRS when he filed his taxes. He can then deduct up to $400 of his wood, tools, paint spending.

 

[HHSTigerFan]

You should figure out the percentage of time you mow the lawns of cemeteries and then you write off that amount. You can't write off something 100% a as business expense unless it is used 100% of the time for only for the business. If you used the lawn mower for your home use, then you shouldn't have written it off as 100%. And remember, the IRS can audit you for up to 7 years later. Same for internet use at a home office. I have a home office. Before I had my son, I was working a lot more on my business, I wrote everything off relating to the office (space, phone, heat, AC, internet, etc) as a percentage of time or space used. This was all under the direction of my accountant.

Hobbies can't be written off and pets can't be written off either. They were just on Fox News talking about this. It would be nice because then I could write off my thousands I spend on swimming each year.

I am going to say "let the IRS prove that I used that mower to mow my yard"....

 

[goodeats]

I've found that creative tax accounting comes with more risks than rewards. For Example, I play in a band that plays clubs on occasion. I had a fellow musician tell me that he wrote off expenses associated with his "business". Expenses such as strings, picks, new amps or instruments, rehearsal space rent, gas to gigs, etc. So I ask my MIL who's a CPA about it. She says that I could do that, however I would be opening myself up to an audit for my "business". So I'd have to start keeping records of dates played, wages paid, and expenses incurred. I'd also have to report the "income" from my "business". So it just wasn't worth it. We always got paid cash at the clubs, and I'm sure the owners would frown at any tax forms you'd try to present. So I'm happy keeping my "business" as a hobby.

Technically you need to report the cash you receive from playing the clubs. Income from ALL sources need to be reported. Granted, the IRS probably wouldn't be able to catch it, but you're still supposed to report. For instance I earn a few hundred dollars a year doing surveys and focus groups. I never receive a 1099. I'm supposed to report this income (I'll neither confirm nor deny I do this ). I can offset this income with the mileage it takes to get to the focus group and a portion of my computer/internet expenses.

 

[Jeff_G]

I am going to say "let the IRS prove that I used that mower to mow my yard"....

Very easy, they send 4 or 5 IRS agents to each of your neighbors, they tell your neighbors they are investigating you for tax invasion, and ask if they have ever seen you using your riding mower to mow your lawn. They remind your neighbors that lying to federal agents carries a prison sentence. You neighbors then sign an affidavit stating they saw you using your mower for personal use.

See they have more money, more time and more lawyers then you…

 

[threecrazykids]

Very easy, they send 4 or 5 IRS agents to each of your neighbors, they tell your neighbors they are investigating you for tax invasion, and ask if they have ever seen you using your riding mower to mow your lawn. They remind your neighbors that lying to federal agents carries a prison sentence. You neighbors then sign an affidavit stating they saw you using your mower for personal use.

See they have more money, more time and more lawyers then you…

And honestly...I'm not trying to be a jerk here, but if the IRS came to my door and asked me something so ridiculous I would tell them to beat it. Seriously? You've got celeb's and GOVN'T OFFICIALS who haven't paid ANY taxes in years and scam our gov't every single year on their taxes and they are really gonna send out a bunch of IRS people over the tax write off on an $8k mower? HIGHLY unlikely. Something else would have to stir them up for that kind of in depth investigation. And if not? Shameful...go after the ones you KNOW about who are cheating the system of millions and still don't pay.

 

[Sinderelly]

I am going to say "let the IRS prove that I used that mower to mow my yard"....

Pretty easy for the IRS if you put it in writing then post on a public forum. I say the safest thing is always be honest.

 

[tlbwriter]

And honestly...I'm not trying to be a jerk here, but if the IRS came to my door and asked me something so ridiculous I would tell them to beat it.

On the other hand, if my neighbor was cheating on his taxes, and I always fill out my forms honestly, why on earth would I want to lie for him? Unless he's using that lawn mower to mow my lawn for free, of course...

As for mileage, the previous poster is correct - as far as the IRS is concerned, the distance you drive TO work is your own problem. You can only deduct the miles you drive FOR work, as part of your job.

 

[horseshowmom]

On the other hand, if my neighbor was cheating on his taxes, and I always fill out my forms honestly, why on earth would I want to lie for him?

I agree. I heard about a situation with someone at a small church that we used to attend a long time ago. He wanted them to pay him in cash rather than a check when he mowed the church cemetary. He got very angry and told them that he wasn't doing anything wrong and that nobody included that money on their income taxes. I told them to feel free to tell him to call me because way back when we were there, my DH also mowed the cemetary, and I included it on our income tax every year. I also included the deductions (but only for the precentage we actually used the lawn mower on the cemetary - as someone else mentioned).

I play by the rules, and I think everybody else should too.

 

[jedijohn]

It would be much easier if they skipped all these deduction rules and just had a flat tax. I doubt it will ever happen though since it would put all the tax prep companies out of business.

 

[horseshowmom]

It would be much easier if they skipped all these deduction rules and just had a flat tax. I doubt it will ever happen though since it would put all the tax prep companies out of business.

 

[sam_gordon]

I am going to say "let the IRS prove that I used that mower to mow my yard"....

The scene: Outside HHSTigerFan's house. Two gentlemen in suits knock at the front door.

HHS: Hello, may I help you?
Suit1: Hello Mr. HHS. We're from the IRS and checking on your return.
HHS: That's fine.
Suit2: You wrote off the value of a riding lawnmower as a "business expense"?
HHS: That's right.
Suit1: You only used it for your business, you never used it to mow your own lawn?
HHS: Yes.
Suit2: How did you mow your own lawn?
HHS: I have a second mower.
Suit1: Can you show us that mower?
HHS: ???

 

[imsayin]

I am going to say "let the IRS prove that I used that mower to mow my yard"....

Actually, the burden of proof, by law is on you. Also, certain deductions that don't make sense to the IRS are red flagged and more likely to be audited.

 

[HHSTigerFan]

The scene: Outside HHSTigerFan's house. Two gentlemen in suits knock at the front door.

HHS: Hello, may I help you?
Suit1: Hello Mr. HHS. We're from the IRS and checking on your return.
HHS: That's fine.
Suit2: You wrote off the value of a riding lawnmower as a "business expense"?
HHS: That's right.
Suit1: You only used it for your business, you never used it to mow your own lawn?
HHS: Yes.
Suit2: How did you mow your own lawn?
HHS: I have a second mower.
Suit1: Can you show us that mower?
HHS: ???

HHS:"I use that Lawnboy push mower sitting right there in the garage"
Suit 1: "Thanks, have a nice day"

 

[HHSTigerFan]

Very easy, they send 4 or 5 IRS agents to each of your neighbors, they tell your neighbors they are investigating you for tax invasion, and ask if they have ever seen you using your riding mower to mow your lawn. They remind your neighbors that lying to federal agents carries a prison sentence. You neighbors then sign an affidavit stating they saw you using your mower for personal use.

See they have more money, more time and more lawyers then you…

And I will show them that I normally spend about 15 hours a week mowing, takes me about 15 minutes to mow my yard with that mower, so they would allow me to write off about 98.4% of the cost of the mower, or $7872.. $128 * 28%, would have to repay about $35.. really think they are going to mess with that?

 

[Hannathy]

And I will show them that I normally spend about 15 hours a week mowing, takes me about 15 minutes to mow my yard with that mower, so they would allow me to write off about 98.4% of the cost of the mower, or $7872.. $128 * 28%, would have to repay about $35.. really think they are going to mess with that?

The size of the lie doesn't make it any less of a lie

 

[bumbershoot]

You are entitled to deduct expenses related to a hobby up to the amount of income from the hobby.

I have a client who actually collects rocks. He will sometimes go to shows and sell to other collectors. He reports the income from the sales and deducts expenses related to this on a Schedule C. Since it is a hobby and not his primary source of income the net income from thisd is not alowed to go below zero.

Was waiting for you to chime in. Having done my sole proprietor taxes for 5 years, I read the tax forms and big book that comes with them, and definitely remembered seeing info on hobby deductions!

Frim www.irs.gov

Hobby Expenses
You can generally deduct hobby expenses, but only up to the amount of hobby income. A hobby is not a business because it is not carried on to make a profit. See Not-for-Profit Activities in chapter 1 of Publication 535.

Now the way I understand this is Joe makes birdhouses as a hobby. He bought the wood, tools, paint, etc and made 20 birdhouses last year which he then sold (because he really doesn't need 20 birdhouses) for $20 each. He reported this $400 as income to the IRS when he filed his taxes. He can then deduct up to $400 of his wood, tools, paint spending.

Great example!


So if the OP's neighbor has made some money with their vehicles, it seems they can deduct some of the cost, up to the amount they made (and are declaring on their taxes). And if the OP somehow makes money with her daughter's horse, she can deduct the cost of the car up to the amount of that money made that is declared. Sounds easy-peasy!

Of course if the OP's neighbor isn't doing it right, he needs to keep his mouth shut, as I believe anyone can turn in a tax cheat, and even get a reward for doing so if it's proven.

And I will show them that I normally spend about 15 hours a week mowing, takes me about 15 minutes to mow my yard with that mower, so they would allow me to write off about 98.4% of the cost of the mower, or $7872.. $128 * 28%, would have to repay about $35.. really think they are going to mess with that?

They might.

When I was a sole proprietor I (sadly) made so little that I would get money back. And still I sweated over the returns, making sure I did it all correctly, making sure I amortized the cost of my adjustment tables each year properly, etc etc, so that I wouldn't get audited. Or rather, so if I did get audited, I wasn't lying and doing this improperly on purpose.

My adjustment tables were portable, and cost around $500 each. And I was careful careful. You seem to be saying that you did something entirely IMproper, for a much bigger amount of money.

I was concerned about audits, so YES I think you ought to be too.


It's not about the amount of money, ultimately; it's about following the rules of the IRS.

 

[tinatark]

If you're in the educational field(including daycare)-you can take off any expense of things you bring into the classroom for use in the classroom(including music cds/party foods/gifts/toys/office supplies/cleaning supplies).

I usually end up taking almost 2500-3000 dollars off a year when I work a full 12 month year because our daycare is a full year program-those costs add up each single month, and, yes, I keep all my receipts in case the IRS wants to see what I actually spend. It's ridiculous the amount of money teachers in the field spend out of their own pocket.

I thought the teacher's/education credit is limited to $250 a year???

 

[chalee94]

would have to repay about $35.. really think they are going to mess with that?

the fun part is that since you lied about one thing, they like to dig and see what else you might have lied about. dishonest people usually get carried away. once they have convinced themselves that "everyone cheats a little", they can justify quite a bit...