Beowulfthehunter Posted February 19, 2009 Share Posted February 19, 2009 I got an oh so wonderful shock in the mail last week. I have been selected for a random audit by the IRS. So along with sweating off a few pounds due to nervousness I have been getting my info togeather. That led me to another issue to be worried about...gaming. I do a decent amount of painting for E-bay and private clients. None of which I put on my taxes. The thing is much the money that comes in goes to buy brushes, paints, more figures, and gaming related trips like cons and tournaments. It is not like I am living like Trump off my brush. I know I have a few other E-bayers on here, o my question to you iis do you cliam your gaming stuff? Now I ask this of both those who paint as a profession and those who do it as a side project. For me it is now a side project as I am too busy with teaching and causing general havoc. Quote Link to comment Share on other sites More sharing options...
Ironworker Posted February 19, 2009 Share Posted February 19, 2009 I got an oh so wonderful shock in the mail last week. I have been selected for a random audit by the IRS. So along with sweating off a few pounds due to nervousness I have been getting my info togeather. That led me to another issue to be worried about...gaming. I do a decent amount of painting for E-bay and private clients. None of which I put on my taxes. The thing is much the money that comes in goes to buy brushes, paints, more figures, and gaming related trips like cons and tournaments. It is not like I am living like Trump off my brush. I know I have a few other E-bayers on here, o my question to you iis do you cliam your gaming stuff? Now I ask this of both those who paint as a profession and those who do it as a side project. For me it is now a side project as I am too busy with teaching and causing general havoc. Perhaps you can show that your only just breaking even on your hobby and not really making a profit (even if you are). I have no idea if that will work but in my experience it's damn near impossible to make any serious time/hour wage painting comission or for e-bay. Especially for e-bay. Then again I've heard they are pretty crappy about "hobby jobs". Good luck! Quote Link to comment Share on other sites More sharing options...
Dilvish the Deliverer Posted February 20, 2009 Share Posted February 20, 2009 The best thing to do is to go to the IRS website. Do a search for hobbies. It turns up a few things such as: Hobby or Business? Per the IRS, you need to report all income. If it is classified as a hobby, you can only deduct expenses up to the income from the hobby. If it is a business, then you may be able to deduct more than your income. You should read up as you know your situation more than I do. I;m am not a tax accountant, but unless you expect to make a significant profit, I would classify it as a hobby. Quote Link to comment Share on other sites More sharing options...
Kheprera Posted February 20, 2009 Share Posted February 20, 2009 As your resident IRS employee, I say Dilvish has the right answer. Gather all your stuff together, research whether what you're doing is a hobby or business on the IRS website, and hope for the best. I wish I could give you more help, but I don't know your particular case and I'm not allowed to. Disclosure and conflict of interest and all that. irs.gov will give you tons of information if you know how to look for it. If you have trouble finding information on something specific email me at [email protected] and I'll try and find the answer for you. Sometimes even I have problems. The areas you need to really look at are the Schedule C (Instructions and Form) and Schedule SE (Instructions and Form). The Schedule C (or C-EZ - which is the short form) is for listing your business profits and expenses. The Schedule SE is for figuring how much tax you pay from your total net earnings from the Schedule C. It can get very confusing. You can also use Publication 17 to help you find information (pdf). The IRS is really concerned about people trying to claim a hobby as a business (and thus getting a lot of deductions) or trying to treat a business as a hobby (and thus escape paying taxes). Your best bet is to be completely, totally, brutally honest with your caseworker. Do not try to hide anything, or act like you are. Make sure to have every single scrap of original paper, including your original Social Security cards, proof of identification, birth certificates for the kids/proof of adoption/guardianship papers, property tax receipts, 1099s, 1098s, bank statements (you can order these from your bank or, in some cases, download them online from your bank's website), and anything else that can possibly be used to fill out your tax return (including the little worksheets they have you fill out to figure things like Child Tax Credit). Since I have to, I include ALL those worksheets and forms with my return when I hand it in. Note: Audits are done on a random selection. Sometimes you get lucky, sometimes you get really unlucky (my aunt has been audited three times). Again, if you need any help finding something, let me know. I'll help where I can and however I'm allowed. Quote Link to comment Share on other sites More sharing options...
smokingwreckage Posted February 20, 2009 Share Posted February 20, 2009 I don't know how it works over there but over here, faced with this, I'd just tell them outright, you do this, you sell that, and (assuming you've never tried claiming it as a business expense) that you thought it was too small an income to be a legitimate business. Just ask questions. If you have a lot of paperwork or have the money, get an accountant on it. Quote Link to comment Share on other sites More sharing options...
Rodnik Posted February 22, 2009 Share Posted February 22, 2009 I would hire an attorney that specializes in these matters. Quote Link to comment Share on other sites More sharing options...
Dragon Snack Posted February 23, 2009 Share Posted February 23, 2009 Note: Audits are done on a random selection. Sometimes you get lucky, sometimes you get really unlucky (my aunt has been audited three times). But once they've got you in their sights, they will keep you in them. I got audited 5 years ago for the first time and have now been audited 3 times (and last year I gave in and checked the 'you do the calculations for me' box, I figured if they calculated it they could "pre-audit" me and I could skip the waiting and hand wringing). That's not just "unlucky", it has to be hard wired into the system. The good news is I've gotten money back every time I was audited (although twice it was less than $20 - at least I didn't have to go in for those), so it's not as bad as people make it out to be. It's still unnerving, especially since the second time I got audited was right after my accountant passed away (I'm still missing paperwork from the ensuing fiasco when the family sold his client list to another accountant). Quote Link to comment Share on other sites More sharing options...
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