Your eBay store, essential oil sales, or cosmetics marketing may seem like a real business to you, but to the IRS these look like hobbies, and they won't let you get away with writing off the miles you drive, mobile phone bills, online purchases, and especially travel and meals for your hobby. The IRS is only going to let you write off your small business losses if the business is your household’s main source of income. If you have a W2 or 1099 from an employer, don’t even think of trying to write off your money-losing hobby as a small business loss on your taxes - unless you are looking forward to paying the IRS back with penalties and interest.
Feeling lonely? How about a visit from the IRS?
You might think the IRS has a building full of auditors peering over your tax return and waiting for you to slip up. Well, they do, but in recent years the IRS has focused on finding compliance errors that are easy to spot and simple to enforce. It might take the IRS a year or more to catch up with you, but when they do you will owe not just the back taxes, but also fines and interest that might add up to more than the taxes you skipped paying. But if you still really want to get the IRS’s attention, you can read this series on how to make certain they notice you.
Comments