Tax Season

[Rich]

A second job isn't a hobby. A hobby is something you do with no expectation or history of making money.

[just another ref]

Originally Posted by Rich

A second job isn't a hobby. A hobby is something you do with no expectation or history of making money.

Exactly

Originally Posted by Rich

I just drove 160 miles roundtrip last night for $50. I'm not in this for the bucks

[Adam]

Originally Posted by just another ref

Exactly

I'm no accountant, but I'd note that not every game fits that example. Rarely do we drive that far for that little without a mileage stipend to help. A couple of games a year, I may "lose" money.

[just another ref]

Originally Posted by Adam

I'm no accountant, but I'd note that not every game fits that example. Rarely do we drive that far for that little without a mileage stipend to help. A couple of games a year, I may "lose" money.

Was not focusing on that particular game, but rather the statement "I'm not in this for the bucks." What I was thinking of was the first year official, who spends $1000 on equipment, mileage, and a trip to camp, then only works a handful of games and his gross income is half that. If he reports a loss, it may or may not be upheld in an audit.

[Adam]

Originally Posted by just another ref

Was not focusing on that particular game, but rather the statement "I'm not in this for the bucks." What I was thinking of was the first year official, who spends $1000 on equipment, mileage, and a trip to camp, then only works a handful of games and his gross income is half that. If he reports a loss, it may or may not be upheld in an audit.

My lay understanding is that it takes a few years of losses before the IRS would change it to a hobby.

[BoomerSooner]

https://www.irs.gov/uac/Business-or-...for-Deductions

This link is from the IRS regarding business vs. hobby. The major presumption the IRS makes in determining if you have a business or a hobby is whether whether or not you made a profit in at least 3 of the past 5 years including the year you are filing. Basically the way they look at it is that if you perpetually have self-employment losses and try to use those losses to offset income from another source, they are going to tell you to quit using your hobby as a tax break.

The ideal way to handle tax issues related to officiating is to get a ledger. I keep a log of everything on my ledger with detailed information including the dates of expenses incurred and how the expenses were associated with income when applicable (i.e. if I had travel expenses that were not reimbursed, I entered the mileage in the travel section of the ledger with the date and which game I traveled to in what location). I keep track of all of my income as well and I know by the end of the year what to expect if I do receive any 1099s. Regardless, I file based on the information I have kept for myself and think of 1099s as potential reminders if I do happen to forget something.

[Adam]

Originally Posted by BoomerSooner

https://www.irs.gov/uac/Business-or-...for-Deductions

This link is from the IRS regarding business vs. hobby. The major presumption the IRS makes in determining if you have a business or a hobby is whether whether or not you made a profit in at least 3 of the past 5 years including the year you are filing. Basically the way they look at it is that if you perpetually have self-employment losses and try to use those losses to offset income from another source, they are going to tell you to quit using your hobby as a tax break.

The ideal way to handle tax issues related to officiating is to get a ledger. I keep a log of everything on my ledger with detailed information including the dates of expenses incurred and how the expenses were associated with income when applicable (i.e. if I had travel expenses that were not reimbursed, I entered the mileage in the travel section of the ledger with the date and which game I traveled to in what location). I keep track of all of my income as well and I know by the end of the year what to expect if I do receive any 1099s. Regardless, I file based on the information I have kept for myself and think of 1099s as potential reminders if I do happen to forget something.

So make a profit, even minimal profit, at least 3 out of 5 years. Should be pretty easy to control your deductions to make that happen.

Note: consult a tax advisor before taking Adam's tax advice.

[scrounge]

Be *VERY* careful before deciding to switch to hobby/non-profit classification. One aspect that isn't talked about in that linked document that discusses business vs hobby tests is that hobby expenses are deductible on Schedule A, if you itemize. However, they are classified as miscellaneous deductions and therefore only deductible if they and all other miscellaneous deductions in total are in excess of 2% of your Adjusted Gross Income (AGI). If the total isn't in excess of 2% AGI, then you don't get to deduct it.