Tax write offs
 

Hello everyone.
I was wondering how you would write off certain items for being an official? Can someone help me out? Are we called an independent contractor?? And what can we write off??

Uniforms, membership dues, training materials, periodicals, camps, sometimes mileage.

Keep all of your receipts and track your mileage.

While I'm sure I don't make near the $ some of these folks do, I use a Schedule C.

See a Tax Accountant if you really have questions.

Indie Contractors yes...if you get 1099 from the leagues/schools/associations you work. I believe the amount earned of $600 or more from one will land you a 1099 in which you must report it and if that's the case, see if your tax person will include stuff I list below...

My tax lady writes off my mileage, expenses related to uniform (shoes, shirts, pants, knee brace :D ). I'm guessing travel expenses could be included but I've never gone far enough that an overnight or meals were necessary for me to report.

Massages?

You will get a 1099 if you earn more than $600 from any organization. You are required to report all the income, even if you don't get a 1099.

Technically...

you can write off your computer if you buy a new one to use for keeping track of your books,

You can write of the area of your house that is your work space. Its done by square footage.

Any maintenace on your car... Deductable.

While all these things have potential for deduction, they all come with pretty specific rules that you want to pay attention to.

Just as an example, maintenance on your car is only deductible if you are taking the "actual" cost route - for most officials, deducting mileage is a much more cost-effective way to go about your tax work.

Computers have specific depreciation rules you need to know, and the home office deduction is only applicable if the room you use for your office is only your office.

Be careful - keeping it simple and not getting audited will do you a lot more good than trying to squeeze blood from a turnip and getting flagged by the IRS...

The mileage rate for 2008 has gone up to 50.5 cents..
 

up from 48.5 cents last year.

If you use this, it covers all costs relating to the vehicle... I can't claim the mileage AND the tune-up. The mileage rate includes the tune-up.

Wert.

By all means consult a professional before taking home office deductions. Specific criteria apply and a very big red flag for examiners once you mail it in.

Yep...and for the return you're working on right now, use the 48.5. That covers the cost of fuel AND wear and tear, which is why rumperee is correct that you can't deduct mileage and your maintenance costs.

I also believe, check with your tax professional, that all mileage is NOT deductible. For example, the miles you drive commuting to work is not a deductible business expense. Therefore, it MAY be successfully argued that the miles from your "real" job to the game site and home are miles driven to and from your "second" job.

An accountant (MBA in accounting, not yet a CPA) told me that one way to possibly get around that is to formally set up a business with your home address since the most miles driven (for me) occur during summer ball. By having a formal business entity I can get up in the morning...check this forum, read over each POE, check a couple of things in the case book, verify directions to the tournament site, etc. (all a legitimate part of an officials duties), then drive to the site. Technically, I started my responsibilities as a basketball official at my home office (even though I don't take that deduction) and the drive to and from the site are most certianly an unreimbursed business expense.

All of that may be possible without an EIN from the IRS, but getting the EIN takes about 2 minutes and cost nothing.

It all comes down to keeping your receipts and maintaining good records. If you don't try to get creative, you should not have problems. Remember to show a profit occassionally (I think it is at least once every three years) or officiating will be considered a hobby and the expenses will no longer be deductible.

As an independent contractor you won't have any problem claiming your mileage. The commuting to the office issue applies to everyone driving to a "real" job with a real office.

What this thread really does point out, however, is how important it is to get all this right. The IRS is not a fun dog to poke - even if it is accidentally.

Whenever my wife comments that I work a lot of games, I remind her of the tax deduction every year. I'm always in the negative because of the mileage.
( :) , that could be a selling point to get more officials.)

If you do make a profit, you also need to pay the Self Employment Tax.

Mileage to/from meetings, clinics, games. Percentage of the cel phone bill and internet. Video tapes/dvds, Datebook, Ref magazine/NASO, Dues and fees, Tolls, Gear. (I have an office too.)

It adds up. Have receipts.

My next license plate:: SHDL C ROX

Laundry/Dry Cleaning

Always in the negative because of the mileage? Are you kidding me? I don't see how this is possible.

As a CPA, I won't give any specific tax advice here, but what I will say is, be very careful about which advice from this board you follow. Some of it is good. Some of it is not so good. Just make sure that it will pass scrutiny in the event of an audit. The best way to be sure of that is to pay someone lots and lots of money to prepare your taxes for you. Mine were efiled last weekend, and I should be getting my nice fat check from Uncle Sam direct deposited next week.

Kramer is the expert on write-offs. He is often quoted here.

What does this guy know about taxes?:D
http://www.thesocialcentre.com/images/kramer2.jpg

Here is a short list of deductions for officiating for this year's Schedule C:

Lines 1, 3, 5, and 7: These lines all should be the same; the total amount of game fees for the year.


Now for the deductions:

Line 9: Automobile expenses including: mileage, parking, and toll road fees.

Line 15: Insurance: liability, game fee loss protection, and suplemental health insurance that is specific for officiating injuries only.

Line 16b: Interest: If you are making payments on the automobile you use for officiating, you can pro-rate the amount of interest that you paid for the year on the car loan.

Line 17: Legal and professional services: Lawyers' fees, accountant fees, any out of pocket medical expenses that are related to your officiating that is not covered by your primary health care insurance or your supplimental medical insurance (for sports officiating only).

Line 20a: Automobile rental.

Line 21: Repairs and maintenance.

Line 22: Supplies.

note: For Lines 21 and 22, one should check the Schedule C instructions.

Lines 24a and 24b: These lines are self-explainatory. Check with the Schedule C instructions.

Line 27 and 48:

membership dues (officials' associations)
registrations fees (StateHSAA, FIBA, ASA, USSSA, etc.)
assingnors fees
uniforms
laundry/drycleaning
postage
education
publications


MTD, Sr.

I've used H&R Block software for the past couple of years to complete my Schedule C. I've found that their explanations regarding what can/can't be deducted to be fairly straight forward and easy to follow. When all is said and done I paid about $14 in self employment tax.

I didn't receive a single 1099 last year, but I reported ALL my referee income. In turn I took all the credits/deductions that were allowed and still came out okay. It's much better to just report it properly and take the deductions than to not report the income (and since you didn't report the income you can't claim the deductions) and risk and audit.

I agree, and I think (but I am not a tax expert, nor did I stay in a HolidayInn Express last night) that you need to occasionally (something along the order of 1 in three years) declare a profit or the IRS might / will decide that this is a hobby and not a business.

Bob:

I think the correct ruling is that a Schedule C business must show a profit two out of the last five years. BUT, that is not how the IRS applies the rule. Back in 1996, at the ABL officiating tryout camp, I officiated with an IRS Agent who worked in the IRS's Headquarters in Washington, D.C. He told me that the IRS looks at the type of buiness and the amount of gross income is being generated.

As example, a person is a stamp collector and travels to stamp shows every weekend to attend stamp shows. The stamp collector trades and sell stamps at these shows. Every year the stamp collector shows gross income between $300 and $500, but shows a taxable loss every ear in excess of ten times his gross income. That would bring out the red flags. The IRS would consider this a hobby and not a business.

Officiating of amatuer sports is a travel intensive buiness and the IRS understands that. I have had a few years when I have had a taxable profit, but more often that not I have a taxable loss and I have been filing Schedule C's for over 25 years.

MTD, Sr.

Where did I say anything about taxes?

Ya know, I'm sorry, but if your travel is eating up all of your game fees, something is wrong with this picture. I mean, I know none of us are in this to get rich, especially if we're just doing high school levels and below. But realistically, you should be making more money per game, at least most of the time, than it costs you to get there and home.

W&S:

Its called the mileage deduction. When I travel to either the IAABO Spring or Fall meetings I drive there from my home, those miles count as a deduction because I am attending a business related funcition. When I go to Florida every summer for AAU and YBOA national tournaments I drive from my home in Ohio to the Florida, those miles count as a deduction. Everytime you attend a rules meeting given by your local association or StateHSAA, the miles you drive to attend those meetings count toward your mileage deduction. If you officiate scrimmage games at the beginning of the season, even if you are not compensated for officiating, the miles traveled for officiating the scrimmage games are deductable.

MTD, Sr.

I will be doing this as well... Most of my counterparts give me this look like "are you crazy", but I am the epitomy of murphys law so... I'll report, but I will also claim my office space at home, and my laptop that I bought this year.

Mr. Denucci, as a CPA and someone who spent half of my professional career preparing taxes, I think I understand the mileage deduction as well as anyone, and the reasons you state for taking the deduction all seem to be legitimate.

While I understand the travel to the meetings is always going to be a cost you have to bear, I can't help but asked if you are given some kind of reimbursement for travelling to those tournies in Florida. It just doesn't seem to make good business sense to me.

Well, I'm an accountant (but not a CPA) and only travel locally with about 35 reimbursable games/year. I claim all income, cash or otherwise because it's the right thing to do, not because of audit risk or that I love paying taxes. With the travel to and from the games, association meetings and scrimmages along with supply expenses, association dues and state registrations, I end up with about 75% of my revenues being expensed out. I don't see that as unreasonable, especially at .50/mile these days.

If I drive 100 miles for a $55 game, I'm only getting whacked for $5 by the IRS. I use about 3 1/3 gallons and at $3/gallon that's $10 for gas and I'm up $45 before other hidden auto expenses (I drive a high-mileage car so it's not too bad). I consider the .50/mile deduction pretty generous actually.

can we deduct
 

postage for mailing back ref shoes that we didn't keep? It seems that I should be able to, but thought I would ask anyway.

W&S:

I got free motel rooms. It isn't about making good business sense. Sports officiating is a profession masquerading as a avocation. Besides, one does not officiate in these national tournaments to make money per se. It is an honor to officiate in these tournaments. One meets officials from all over the country and has the opportunity to make life long friends.

But one other point I would like to make. I have done examinations of my expenses in past years. My exact pro-rated automobile expenses never come close to the mileage deduction. When comparing my after actual expense income compared to my mileage expense calculated income, yes I make a profit every year, but the because the mileage deduction is so much greater than my actual expenses it is crazy for me not to take the mileage decuction. The mileage deduction creates a paper loss that does not reflect my actual profit/loss for the year. IRS rules are such that I can take the deduction that gives me the largest deduction under the rules not the smallest deduction.

I think that it is a great country that allows me to have a taxable loss, while making an actual profit after my acutal expenses are deducted. If it is good enough for a large corporation it is good for a mench like me and my fellow officials.

MTD, Sr.

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.

My understanding is that if you leave from work to go to a game, you can deduct the mileage from your office to the game, and then from the game to your home. If this all makes sense.

For an official who happens to work graveyard shift at his primary job, he could deduct mileage from home to game, then from game to work.

Taxes ...
 

Regarding my officiating income, and taxes. My accountant asks me for my total income, and I tell him all of my income, even when I get paid in cash. He also asks me for all of my expenses; dues, fees, fines, uniform, shoes, whistles, camps, etc. I wash my own uniform at home, so he makes an allowance of $5 per week for laundry. He also asks for my home to game to home round trip mileage, which is easy to get from Arbiter, as well as round trip mileage for meetings, camps, etc. I believe that he makes some type of Social Security payment to go along with my income taxes.

I give him what he asks for. No more. No less. I don't ask any questions. I'm not an accountant, nor do I play one on television. I trust that he will keep me out of jail. He's the expert. I have no idea what he does with the information that I give him. I just sign the forms, and send in my check, or accept my refund. I know that ignorance is no excuse as far as the law is concerned, but I'm way out of my league here. I know more about rocket science than accounting. That's my story, and I'm sticking to it.

Hopefully, I won't have to use this:

http://www.etailgifts.com/images/Get...0of%20Jail.jpg

As Mark has previously pointed out...the stripes are going the wrong way.

I've heard he goes both ways..............not that it's a bad thing.

I bought a Garmin GPS Unit and I am going write that off as well since I use it more for finding schools.

I would think that's fully deductable

I just wanted to point out explicitly that this isn't accurate. As an independent contractor, you can deduct mileage to and from games regardless from where you leave.

A good idea is to not claim expenses that will increase the likelihood of an IRS audit. Just sayin'.

You think that would raise a flag?

Let's be serious. Would you EVER use it to find something other than a school you have a game at? Would it EVER be plugged in if you were NOT going to a game? Sorta like a cell phone that you only use to call your partner[s], assignor[s], and schools.

I can't speak for others, but if I had one, I can't imagine using it for anything other than game sites. I don't go to that many other places I can't find with an address and mapquest.

You couldn't find the game sites with an address and mapquest?*










*First question the auditor would ask.....:D

Fair question, but the benefit of the system is that it will adjust if my route is forced to change (due to traffic, construction, weather, etc). Since I need to be at the venue within a very specific time frame, this is a crucial benefit. It is also a benefit I don't need for anything else I may do.

Pretty good argument, but the key word is need, is it not? Does anyone really need one of these? They must not be a necessity since such a short time ago nobody had one. In reality, I say this is not a gamebreaker. If you choose to deduct the entire cost of one of these units and you do get audited, it may fly through with no problem, or they may allow a percentage. (1/3, 1/2, whatever) Probably not a big deal. Probably worth a try.

We don't "need" tax software, either, but we're allowed to deduct that.

We don't "need" 35 shirts, either, but there's no limit on how many we can deduct each year.

We don't "need" extra whistles, but, well, you get my point.

The IRS isn't in the business of determining what a business may or may not need.

We Don't Need ...
 

Be prepared to answer the IRS auditor with these statements:
"Tax software? We ain't got no tax software. We don't need no tax software! I don't have to show you any stinkin' tax software!"
"Shirts? We ain't got no shirts. We don't need no shirts! I don't have to show you any stinkin' shirts!"
"Extra whistles? We ain't got no extra whistles. We don't need no extra whistles! I don't have to show you any stinkin' extra whistles!"

And be sure to dress like this:
http://farm1.static.flickr.com/1/531...a6aeef.jpg?v=0