Taking a Loss on Taxes
 

I just had a friend do my taxes (Turbo Tax)...and after claiming my income from officiating and deducting mileage, camp fees, association fees, etc...I came up with a loss of over $2,000. So my spreadsheet of revenue and expenses came in handy.

Like someone said...doesn't make much sense to officiate at a loss, but my 2 hour drives for Division II and III games really aren't about making money, but to get the experience to one day maybe do Division I or better. I know just camps alone, I lose about $1,200 in mileage, camp fees, food/drink, etc.

But it's all about the enjoyment of reffing, and one day if there is an opportunity for the big time checks, then financially it will make sense.

-KG

Good luck to those that are claiming or not claiming their officiating income.

This was my first year...I only did rec league and got under $600, so I won't need a 1099. I already filed my taxes and got my returns before my officiating check came in. Do I have to do another filing separate for this or would I be able to wait to do it for next tax year?

I am not a tax accountant, but most taxpayers are on a cash basis, so you'd report the income in the year in which it was received. So, if you worked in 2007, but were paid in 2008, you'd report the income on your 2008 taxes (usually filed in 2009).

Thanks for the help. I worked and was paid in 2008, so that mean's I'll file it in the 2009 taxes. I appreciate it!

As a CPA who at one time in my career did taxes, I can confirm that this is correct.

You should file it on your 2008 taxes. You file your 2008 taxes in 2009 (usually).

My understanding, however, is that if you are really banking then you might be required to make quarterly estimated tax payments. Its similar to your employer taking taxes out of your paycheck. If you overpay you get that money back in 2009 once you file. If you don't make quarterly payments, and you've underpaid over the course of the year by a certain amount (me thinks the number is $1,000), then you can be subject to aditional penalties. That said, I doubt there are that many officials making enough to come up with that kind of tax liability. Ultimately my point is that there is a case where you would file 2008 income in 2008 (but I don't know if "file" is even the right word).

Yes -- you need to consider your total tax picture when deciding whether to file quartely estimated taxes. If you have another job from which taxes are withheld, you can increase teh withholdings to cover the amount you'll owe from officiating (and itnerest, capital gains, etc.) and not have to file quearterly.

The penalty for underwithholding (and under-payment of quartly taxes) varies by income, but for most it's something like either last-years taxe's owed or 90% of this year's taxes owed.

Here's another tax related question. I bought a GPS unit in 2007 that I use to get to games. I think that this is something that I have to depreciate rather that simply write off. Can anyone point me in the right direction?

I am not a CPA or an MBA...but... just because you buy something that you use to earn income (get to games) does not mean it is deductable. Is it reasonable to assume you'll use it when NOT getting to games? I would think so and that makes it only partially deductable at best. And would you (or could you) actually depreciate the cost of this $500 thing as opposed to expensing it? Who knows... maybe W&S can tell us. Same idea applies when deducting car expenses - you get to deduct allowable expenses only to the extent it's applied to generating income. You can deduct actual partial expenses instead of taking the standard mileage but for me it usually works out better to take the standard mileage.

btw, AFAIK this same thinking applies to uniforms... if you're going to deduct the entire cost of your $197 Nike Air-Whatevers then you should feel comfortable explaining that the only time you put them on your feet is 30 minutes before the game and they go back into storage immediately afterwards.

As for mileage, which I think by far is the largest expense for most of us, my understanding is you can deduct the cost of driving from 1 place of business to the next. Drive from home to a game? Can't deduct. Drive from work to a game? Can deduct. You cannot deduct the cost of driving back home. You can deduct tolls and parking costs. This is how I handle it, and I deduct every mile I am allowed at least to offset the travel expense money I recieve that I must report as income.

IMO the best policy it to report all income, take every reasonable deduction but don't squeeze blood from the turnip (as someone else said). If you're taking a tax loss every year you may want to rethink how aggressive you're being with your deductions... or go work for leagues that aint so damn cheap :)

I actually moved into the black this year. Mostly due to moving up and seeing a jump in game fee income. Going to a camp added a few hundred miles on the expense side in addition to the cost of the camp. I'm pretty consistent from year-to-year and have not shown huge losses and this year not a huge income. I consider a few hundred bucks on either side of the zero line to be moderate. If all of a sudden I 'lost' $3000, I think it would really draw attention. Especially from my wife.

I'd like to have someone chime in on the mileage deduction. You're not at the same site every game, therefore it's not the same as driving to your office. I liken it to a traveling salesman who leaves for a 150 mile sales call from his home. You're saying that wouldn't be deductable?

It would be deductible, but (and I'm not a CPA, so someone will be along to correct me) if you have a regular office you commute to, you would be expected to deduct the normal round trip mileage to/from your office from your sales call commute. If you leave from your office, it would be all deductible, provided you return there after your call and then drive home.

A lot of this is, simply, deducting what you feel comfortable with, with your accountant's knowledge of the law in mind.

My office is 1.25 miles from my home. I drive by my office on the way home from any game site.:D

I spoke with a CPA friend of mine who officiates football. His understanding is that you can deduct mileage from home to game, or from work to game, and then from game to home. It's not the same as commuting to your job because you are not an "employee," you are an independent contractor. Also, the locations are not analogous to your regular office.

If you are not considered a private contractor, this could very well be different.

Also, as my information is not first hand, you may feel free to disregard it.