Robert J. Fedor, Esq., L.L.C.

Why hobbies and tax deductions rarely go together

Many Ohio residents enjoy a variety of hobbies. Traveling, breeding dogs and motor cross racing are just a few examples of the varied hobbies that are not only fun and enjoyable to those who participate, but may also be tax deductable. Sounds great right? Enjoy a favorite hobby or pastime while also getting a tax break. Well, it's not that easy and individuals who plan to write off expenses associated with a hobby, and avoid scrutiny by the Internal Revenue Service, would be wise to adhere to the following rules.

The IRS doesn’t look kindly on individuals who attempt to write off certain expenses and IRS officials are prone to closely scrutinizing such deductions. For those individuals who wish to write off expenses associated with a beloved hobby, it's wise to take a business-like approach when doing so.

For example, say an individual enjoys breeding and training dogs. Like any business, having a favorable profit to loss ratio bodes well for those individuals who want to deduct expenses associated with a hobby. Additionally, keeping accurate business and financial records is critical. Another way to convince the IRS that a hobby is more than just an enjoyable pastime includes being able to produce a detailed business plan.

Individuals who have questions related to what types of deductions are and are not deductable would be wise to consult with a tax professional. In cases where an individual takes deductions and later learns that he or she is the subject of an IRS audit or is charged with a tax crime, a criminal defense attorney who handles IRS matters should be consulted.

Source: Forbes, "Travel The World, Write It Up, Write It Off," Robert W. Wood, Jan. 17, 2014

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