Last year I decided to turn my hobby into a small business on the side. It is a very simple process which has great tax benifits! Part of the last round of stimulus included the ability for a small business to depreciate equipement all in the same year of purchase (see section 179 depreciation). In short, I spent about $4,600 in gear, computer equipement, travel, software and advertising (my website). This $4600 offset my taxable income, putting about $1000 back in my pocket!
If you plan on spending a significant amount of money on gear this year, it may be worth your while to turn your hobby into a business. I'm not sure if the section 179 rule will be around in 2013, but you can still depreciate over several years if it is not.
How hard is it? Two pieces of paper in NY state. Register your business name in the county you live in and apply to the state for a tax collection certificate.
Disclaimer: This is an FYI and not financial advice. I think there are a lot of people that may think this is complicated, it is not!!
It is also very easy to file with your personal return. I've used freetaxusa.com for about the last 6 years. The only thing different this year was entering the business purchases, the site did the rest. ($10 to complete and Efile your fed and state return). I can't believe how many people I know who are still paying H&R or a tax pro for simple returns.
If you plan on spending a significant amount of money on gear this year, it may be worth your while to turn your hobby into a business. I'm not sure if the section 179 rule will be around in 2013, but you can still depreciate over several years if it is not.
How hard is it? Two pieces of paper in NY state. Register your business name in the county you live in and apply to the state for a tax collection certificate.
Disclaimer: This is an FYI and not financial advice. I think there are a lot of people that may think this is complicated, it is not!!
It is also very easy to file with your personal return. I've used freetaxusa.com for about the last 6 years. The only thing different this year was entering the business purchases, the site did the rest. ($10 to complete and Efile your fed and state return). I can't believe how many people I know who are still paying H&R or a tax pro for simple returns.
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