Every Female Business Executive Needs a Hobby—But Can You Deduct It?
We all put a lot of money and energy into our hobbies, whether they include sky-diving, training our pets, practicing yoga, or woodworking. Being able to afford the hobbies of our choice is one of the privileges of executive-level work, but is it possible to deduct these hobby expenses from our taxes? Accountants have been asked this question time and again, and many leading experts have actually created a list of three tips to help anyone legally deduct their hobbies. Let’s have a look:
- Match income and loss. If you make $20,000 selling the clothes you design, but you netted $20,000 in expenses, the government won’t look askance at this. You are not claiming a loss, so this should be a safe approach.
- Keep impeccable records. If you conduct yourself in a businesslike way, the IRS will consider your enterprise a business. If you are ever audited, your records will show your intention is professional, not frivolous.
- Be sure to show a profit in three out of five years. Always claiming break-even or a loss starts to look fishy after a while, so some years do pay taxes and do show a profit, even if it’s a small one. This proves that your business is legitimate, and not a farce.
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