Chasing and taxes

[David Wolfson]

Disclaimer: usual....

Good info about Section 179 property! My limited knowledge on this is pretty much all before last year. Doesn't completely get one off the hook, though, and gets a lot more attention from the Friendly IRS I'd bet. There are "pitfalls", too:
http://www.turbotax.com/articles/Watchfora...9Deduction.html

 

[Mikel Shively]

I made $75 chasing last year and lost approx 700. this is the first year that i will be filling with a schedule C. Will I be able to take this deduction, or will I fail the hobby test becuause I didn't file a schedule C for 3 years?

 

[Doug_Kiesling]

Originally posted by Mikel Shively
I made $75 chasing last year and lost approx 700. this is the first year that i will be filling with a schedule C. Will I be able to take this deduction, or will I fail the hobby test becuause I didn't file a schedule C for 3 years?

Best Advice, hire an accountant to do your taxes.

 

[Mikel Shively]

it would cost me more to get a accountant to do my taxes than what i would have to pay in to the irs even if i didnt claim storm chasing as a business (about $35) just trying to save a few bucks. didn't know if i could claim it or not, but i will probably just leave it off and pay...it would cost me more in ibuprofen to figure out that mess that what i would have to pay in.

 

[Scott Olson]

Originally posted by Mikel Shively
it would cost me more to get a accountant to do my taxes than what i would have to pay in to the irs even if i didnt claim storm chasing as a business (about $35) just trying to save a few bucks. didn't know if i could claim it or not, but i will probably just leave it off and pay...it would cost me more in ibuprofen to figure out that mess that what i would have to pay in.

The three years thing has to do with profit vs. losess (establishing that you really are a business). I'd only bother with it if you can get into a lower tax bracket using these expenses.

 

[Kurt Silvey]

Originally posted by David Wolfson
Honestly, I don't think it's that complicated, unless you involve a high-powered lawyer! :wink: It's not like real estate IMHO.

I filed a Schedule C for some years to offset significant Form 1099 income (and sometimes a bit more) from singing with expenses including lessons, music, and travel. I was audited and passed without problems. Meanwhile I had other earned income.

It's pretty easy to justify offsetting any income from chasing with expenses. It's more difficult to also justify offsetting a big chunk of your unrelated earned income with a lot of excess chasing expenses. Unless you keep good records and build up a good case for intent, it looks like what it is :wink: : a way to deduct hobby and recreational expenses from your earned taxable income.

Dave is right. If it is a hobby, then that is what it is, and not a tax deduction. If you have (declared) earned income from chasing, then you can also have expenses. If after three years your expenses continue to exceed your income, then it will be considered a hobby again. As for spotting, if you volunteer for a “recognizedâ€￾ (registered) non-profit organization, and you incur travel and other expenses while working as an agent for that organization, then you can deduct those expenses. The organization you volunteer for will be able to supply you with their non-profit status information. If they can’t, then their not!

 

[cdcollura]

Good day,

In my case I sold some stock video of hurricane stuff as well as some DVD packages.

ANYTHING with a 1099 needs to be reported, by law, and usually is for any sale over $600, but any company issuing an "ap check" can issue a 1099 even if its for just $100.

What I do is I have my accountant I have been using the past 4 years at H & R block handle this. Many years I have a W2 from my "main job" in computers, and 1099 based earnings for any video / stock footage / DVD sales, etc.

These are separate, but for the 1099 stuff I was able to claim expenses on them (this denotes the highly "grey" line between a storm chasing "hobby" or "job" - or even both).

In 2002 and 2003 I had W2 earnings based on my job in IT (for a company) and then contract work in IT (self-employed, paid as AP with 1099 based income). The year of 2003 was my first experience with an ESTIMATED INDIVIDUAL tax form, which I did each quarter.

For 2004, income was BOTH from my IT contract and hurricanes Charley / September's Fury DVD's I worked on with BNVN ... Jim Edds, Jeff Gammons, Doug Kiesling, Mark Rackley, and Jason Foster. Both these were all 1099 based, and in this case, I WAS able to use expenses.

For 2005, I have a W2 for IT work and 1099(s) for hurricane chasing footage as well (stock / DVD). The 1099 based income will have deductions based on expenses / contingency incurred during chasing (where footage was USED to make any money).

I always pay taxes as an individual (if not W2 based) such as 1099 income each quarter using an estimated tax form. On April 15 (or before) I do my taxes with my accountant and that is when I put all the DEDUCTIONS down (after the fact) ... Then I get ready for my big refund I will use to chase in the plains ;-)

 

[Mike Krzywonski]

The following links provide some helpful info:

http://www.irs.gov/newsroom/article/0,,id=169490,00.html

http://www.danheller.com/photo-inc.html#3

 

[John Wetter]

My wife (a CPA) has done a lot of looking in to this to try to justify all the money I spend on chasing... When I was contracted with a TV station, we did deduct things on an amortization basis following the IRS guidelines for the different items like a laptop and camera gear as I was able to show steady, accountable income on a 1099. As those contracts are pretty much gone and now on a freelance sell-the-video-when-you-can setup, we don't deduct anything as it's a hobby as has been stated. If you incorporate, you have other options also as stated, but to write off mileage as a volunteer, you need to be a member of something to count your volunteer time/mileage. In other words, your name better show up on a roster somewhere... And to avoid headaches of proving things later, it should be either a government entity or a 501c3 to count it. When I'm doing work directly for the NWS like driving to trainings, etc. I count that mileage. When I'm spotting, I don't count the mileage as I don't 'belong' to something there. As far as the decals, she found something at one time in either the state or federal code that the decals must be of an affixed nature, in other words: no magnetic signs you put on and take off.

Not to change the subject, but the hobby aspect will help on the insurance side. Because it's a hobby, your stuff is covered under your auto/homeowners/renters insurance. If you incorporate, you get the tax breaks, but you better be ready to pay the commercial insurance rates for your car, your equipment, and other stuff.

Unless you're really into it and expect to make a boatload of money, I would say keep it a hobby...

 

[David Drummond]

Just a little note, if you do happen to get a 1099 from ANYONE for anything chasing related, you better be sure and file it. The person that sent that reported it, and when the IRS computers run their matching, if you didn't file it, your likely to get flagged for an audit. They aren't required to send you one unless they paid you at least $600, but most will because even $100, if they don't send you one, then they have to pay tax on that money.

 

[Mike Johnston]

Amazing this thread resurfaced after 6 years. Anyway, to go back to possible charitable mileage deduction for spotting activities, I re-visited the SKYWARN web site and it specifically states that SKYWARN "is not a club or organization." It seems to be more of a concept or a program, although it is a registered trademark of the NWS. At any rate, this would seem to preclude any charitable mileage deduction - unless anyone else can find anything to the contrary.

And David is exactly right about 1099 income - it will be matched to your tax i.d. number by the IRS computers, so you need to report the gross somwhere (Most often, it will be in the form of non-employee compensation which normally goes on Schedule C.)

 

[Dan Robinson]

The IRS link Mike posted pretty much covers it.

This is another good reason to not give video away for free or cheap. If you make enough to cover your expenses through the year plus a profit (difficult but not impossible at fair video rates along with hard work), your expenses are deductible. If you consistently give footage away cheap and don't break even every year - basically taking a loss each year to subsidize the production companies' and TV networks' profits - not only do you not get to deduct your expenses, but you'll pay income tax on the revenue you did receive. It's a triple whammy: TV networks profit, you take a loss, then pay taxes on the peanuts you did make.

It's been said before, but find an accountant! No matter how simple your returns are. An accountant will pay for him/herself.

 

[Jason Tunzer]

Not sure if this will help. http://money.msn.com/taxes/get-tax-breaks-on-your-hobby-bankrate.aspx