This is the time of the year when a lot of people make new resolutions and start thinking about new ways of making additional money. IRS advises taxpayers to follow appropriate guidelines when determining whether an activity is a business or a hobby
(i.e. an activity not engaged in for profit)
Hobby losses/expenses are not tax deductible. Losses from Hobby activities are not deductible, but if you were to engage in a business, there are numerous costs of doing business that qualify as deductions. These include, but are not limited, to the following ten:
1. Home Office: If you use a portion of your home to run your business, you may be able to deduct a portion of your rent or mortgage payment, utilities, insurance etc.
2. Vehicle: Even if you personally own your vehicle rather than own it in the name of your business, you can deduct a portion of your car use, when it is for business purposes.
3. Travel: You may deduct small business trip expenses, such as airfare, transportation, meals, entertainment, hotel stays and other expenses you incur while traveling for your business.
4. Interest: Business interest expense is an amount charged for the use of money you borrowed for business activities.
5. Retirement Plans: Retirement plans are savings plans that offer you tax advantages to set aside money for your own, and your employees', retirement.
6. Rent: Rent is any amount you pay for the use of property you do not own. In general, you can deduct rent as an expense only if the rent is for the property you use in your trade or business.
7. Taxes: You can deduct various federal, state, local, and foreign taxes directly attributable to your trade or business as business expenses.
8. Insurance: Generally, you can deduct the ordinary and necessary cost of insurance as a business expense, if it is for your trade, business insurances.
9. Education: You can deduct all business-related seminars, classes, educational tapes or CDs, and convention fees.
10. Repairs: Business repairs and replacements that increase the value of your property - make it more useful or lengthen its useful life.