Writers expenses

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Subject Author Date Writers expenses garagecapital 10-13-2009  Re: Writers expenses removeps-groups@yahoo.com 10-13-2009  Re: Writers expenses garagecapital 10-14-2009  Re: Writers expenses Stuart A. Bronstein 10-14-2009  Re: Writers expenses removeps-groups@yahoo.com 10-14-2009  Re: Writers expenses garagecapital 10-15-2009  Re: Writers expenses paulthomascpa 10-15-2009  Re: Writers expenses D. Stussy 10-15-2009  Re: Writers expenses Bill Brown 10-16-2009
Posted by garagecapital on October 13, 2009, 9:24 pm Please log in for more thread options I'm a writer. I spent about $5,000 on books, stationary and office supplies and software, in Tax Year 2008. But I earned no income from writing in Tax Year 2008 and probably will not until the 2010 Tax Year. So ... Can I take these deductions as a business loss somehow? If so, do I just roll them over until the year comes when I have income or a profit; I suspect I will have a similar situation for Tax Year 2009. Or do I amend for 2008, and take another loss for 2009? My spouse is a very high earner, mid six figures. Will our joint household income figure be so high, it means I can't take or qualify for this business loss deduction? Lastly, is there anyway to wrap education expenses into these business expenses and thus loss. One accountant told me our income was too high for an educational deduction on the standard itemization form. Thanks in advance. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by removeps-groups@yahoo.com on October 13, 2009, 11:18 pm Please log in for more thread options > I'm a writer. I spent about $5,000 on books, stationary and office > supplies and software, in Tax Year 2008. But I earned no income from > writing in Tax Year 2008 and probably will not until the 2010 Tax > Year. > > So ... > > Can I take these deductions as a business loss somehow? Yes. If you intend to be a profitable business, then you can take a deduction. But the IRS may view the activity as a hobby, in which case the expenses are allowed only as an itemized deduction subject to the 2% of AGI limit (only amounts over 2% of your income are deductible on Schedule A), along with other complicated restrictions, which often makes the deduction worthless. Search the internet for terms like "business versus hobby" and"how to deduct hobby expenses" to read more. To prove your activity is a for-profit business you have to keep businesslike business records, separate checking/savings accounts. And you generally have to show a profit in 3 of 5 years. Good thing you don't have meals and entertainment expenses. If I were an IRS agent, I'd be very curious about these. > If so, do I just roll them over until the year comes when I have > income or a profit; I suspect I will have a similar situation for Tax > Year 2009. Or do I amend for 2008, and take another loss for 2009? You have to claim the loss on your 2008 return. If your net income is negative, you have a net operating loss (NOL), and you can carryback or carryforward the loss to future years. This is complicated though. > My spouse is a very high earner, mid six figures. Will our joint > household income figure be so high, it means I can't take or qualify > for this business loss deduction? You always get to take the business loss. Since your spouse is a high earner, you won't have to worry about the NOL. > Lastly, is there anyway to wrap education expenses into these business > expenses and thus loss. One accountant told me our income was too high > for an educational deduction on the standard itemization form. Education credits for you would likely be the lifetime learning credit, which is not available if your adjusted gross income (that is, net gross income minus 401k contributions, FSA, etc) is over around 100k. You have to read the IRS publication to get the exact number. The tuition and fees deduction is available to higher earners, but still ends at around 160k of income. You can deduct educational expenses as a business expense. If you do this, don't claim a lifetime or tuition and fees for them. However the IRS has a rule that expenses you incur to enter a new field are not deductible, but after you've entered your field they are. What kind of courses are we talking about here? -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by garagecapital on October 14, 2009, 2:18 am Please log in for more thread options On Oct 14, 2:18 pm, "removeps-gro...@yahoo.com" <removeps- gro...@yahoo.com> wrote: > > > I'm a writer. I spent about $5,000 on books, stationary and office > > supplies and software, in Tax Year 2008. But I earned no income from > > writing in Tax Year 2008 and probably will not until the 2010 Tax > > Year. > > > So ... > > > Can I take these deductions as a business loss somehow? > > Yes.  If you intend to be a profitable business, then you can take a > deduction.  But the IRS may view the activity as a hobby, in which > case the expenses are allowed only as an itemized deduction subject to > the 2% of AGI limit (only amounts over 2% of your income are > deductible on Schedule A), along with other complicated restrictions, > which often makes the deduction worthless. > > Search the internet for terms like "business versus hobby" and"how to > deduct hobby expenses" to read more. > > To prove your activity is a for-profit business you have to keep > businesslike business records, separate checking/savings accounts. > And you generally have to show a profit in 3 of 5 years. > > Good thing you don't have meals and entertainment expenses.  If I were > an IRS agent, I'd be very curious about these. > > > If so, do I just roll them over until the year comes when I have > > income or a profit; I suspect I will have a similar situation for Tax > > Year 2009. Or do I amend for 2008, and take another loss for 2009? > > You have to claim the loss on your 2008 return.  If your net income is > negative, you have a net operating loss (NOL), and you can carryback > or carryforward the loss to future years.  This is complicated though. > > > My spouse is a very high earner, mid six figures. Will our joint > > household income figure be so high, it means I can't take or qualify > > for this business loss deduction? > > You always get to take the business loss.  Since your spouse is a high > earner, you won't have to worry about the NOL. > > > Lastly, is there anyway to wrap education expenses into these business > > expenses and thus loss. One accountant told me our income was too high > > for an educational deduction on the standard itemization form. > > Education credits for you would likely be the lifetime learning > credit, which is not available if your adjusted gross income (that is, > net gross income minus 401k contributions, FSA, etc) is over around > 100k.  You have to read the IRS publication to get the exact number. > The tuition and fees deduction is available to higher earners, but > still ends at around 160k of income. > > You can deduct educational expenses as a business expense.  If you do > this, don't claim a lifetime or tuition and fees for them.  However > the IRS has a rule that expenses you incur to enter a new field are > not deductible, but after you've entered your field they are.  What > kind of courses are we talking about here? Aren't there some relevant regs that relate specifically to artists and writers acting as a business. I was an established journo for 20 years, been a writer in the past; this is clearly not a hobby, and I intend to make money from it, someday. Is there a different for for artists and writers working as a business? (Btw the education stuff, like most meals and entertainment, sounds extremely aggressive, and the household AGI is above the 160K, so for deductions I'll stick to pretty solid ones ...) -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Stuart A. Bronstein on October 14, 2009, 9:21 am Please log in for more thread options > Aren't there some relevant regs that relate specifically to > artists and writers acting as a business. I was an established > journo for 20 years, been a writer in the past; this is clearly > not a hobby, and I intend to make money from it, someday. Is > there a different for for artists and writers working as a > business? Others may know this better, but you're right, there are special rules for writers. Under §263A certain business expenses must be capitalized, meaning you can deduct them all when spent but have to write them off over time. Writers have an option to be exempt from that rule. I don't remember all the nuances at the moment, but you should look into it. -- Stu http://downtoearthlawyer.com -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by removeps-groups@yahoo.com on October 14, 2009, 7:20 pm Please log in for more thread options wrote: > > Aren't there some relevant regs that relate specifically to > > artists and writers acting as a business. I was an established > > journo for 20 years, been a writer in the past; this is clearly > > not a hobby, and I intend to make money from it, someday. Is > > there a different for for artists and writers working as a > > business? > > Others may know this better, but you're right, there are special > rules for writers. Under §263A certain business expenses must be > capitalized, meaning you can deduct them all when spent but have to > write them off over time. > > Writers have an option to be exempt from that rule. I don't remember > all the nuances at the moment, but you should look into it. Section 263(h) exempts individual writers/artists (ie. freelancers) from having to capitalize their costs. A writer might have to buy paper, pay fees to attend conferences, pay mileage to attend these conferences, and they would be deductible right away because section 263 does not apply to them. Of course, if the individual buys a camera to take pictures, the camera has to be depreciated because it is ordinarily not deductible, although section 179 might allow them to write if off at once. Though when there are no profits, as is the case here, section 179 (and I think bonus depreciation) is not available. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Deductions for writers August 19, 2008, 5:40 am Deductions for writers - planning ahead August 19, 2008, 4:26 pm Moving Expenses. January 18, 2007, 3:42 am Tax Line for Expenses January 24, 2007, 2:54 am Medical expenses February 13, 2007, 5:41 pm Patent Expenses February 18, 2007, 9:32 pm Put Education Expenses Where? 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