logo
g Text Version
Beauty & Self
Books & Music
Career
Computers
Education
Family
Food & Wine
Health & Fitness
Hobbies & Crafts
Home & Garden
Money
News & Politics
Relationships
Religion & Spirituality
Sports
Travel & Culture
TV & Movies

dailyclick
Bored? Games!
Nutrition
Postcards
Take a Quiz
Rate My Photo

new
European Travel
Action Movies
Bible Basics
Houseplants
Romance Movies
Creativity
Family Travel


dailyclick
All times in EST

Clairvoyance: 08:00 PM

Full Schedule
g
g Taxes Site

BellaOnline's Taxes Editor

g

Is Your Creative Activity A Business Or Is It A Hobby?

Guest Author - Kate Woods

Creative people doing creative things often run into problems when it is time to file their tax returns. We all believe in our creative hearts that when we create and sell our work that we are working at a business pursuit, but the IRS may see things a little differently. One of the key questions to ask yourself in determining if your writing career or your other artistic pursuit is a business or a hobby is - are you carrying on this activity to make a profit?

Now, of course most writers, artists and other creative people will respond with a resounding YES to this question because we are all planning to support our dreams and our lives with our creative activity. Unfortunately, the IRS being the savvy fiendish folks that they are, make answering that question a bit more complicated. Since a hobby cannot create a loss that can be used to offset other income but a business can create an offsetting loss the IRS is a little particular about exactly how you classify your creative pursuits. While they consider a hobby something you do for enjoyment as opposed to something that you do for profit, they consider a business something you do for profit with or without corresponding entertainment or pleasure.

Given the fact that they are so particular they have kindly given us a list of 9 facts to take into account when trying to determine if you are carrying on your creative activity “For Profit”. Now they advise that “no one factor alone is decisive.” All 9 factors should be considered.

The 9 factors they use to determine if a profit motive exists or not are as follows:

You carry on the activity in a business-like manner,

The time and effort you put into the activity indicate you intend to make it profitable,

You depend on income from the activity for your livelihood,

Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business),

You change your methods of operation in an attempt to improve profitability,

You, or your advisors, have the knowledge needed to carry on the activity as a successful business,

You were successful in making a profit in similar activities in the past,

The activity makes a profit in some years, but the amount of profit it makes, for instance a very small profit of $2 or $5 or even $25 might not be considered a large enough profit to prove profit motive, and

You can expect to make a future profit from the appreciation of the assets used in the activity.

So, there you have it in a typical IRS fashion – as clear as mud. Since this information hasn’t changed over the last several years, hopefully, it will be helpful for the upcoming tax season and for future tax seasons.

For additional information you can refer to IRS Publication 535, Business Expenses on the IRS Website, consult your tax advisor, or call the IRS at 1-800-829-1040 (but be prepared to listen to The Nutcracker Suite for maybe minutes or maybe hours while on hold).

And -

I hope you're enjoying Tax Facts on the Taxing Subject of Taxes!



Any U.S. tax advice contained in this electronic communication was not intended or written to be used, nor can be used, by any recipient of this communication for the purpose of avoiding penalties that might be imposed pursuant to the Internal Revenue Code or U.S. Treasury Regulations, or any other state or local law or regulation.

Content of this site is not intended to replace professional consultation.


This site needs an editor - click to learn more!

Add Is+Your+Creative+Activity+A+Business+Or+Is+It+A+Hobby%3F to Twitter Add Is+Your+Creative+Activity+A+Business+Or+Is+It+A+Hobby%3F to Facebook Add Is+Your+Creative+Activity+A+Business+Or+Is+It+A+Hobby%3F to MySpace Add Is+Your+Creative+Activity+A+Business+Or+Is+It+A+Hobby%3F to Del.icio.us Digg Is+Your+Creative+Activity+A+Business+Or+Is+It+A+Hobby%3F Add Is+Your+Creative+Activity+A+Business+Or+Is+It+A+Hobby%3F to Yahoo My Web Add Is+Your+Creative+Activity+A+Business+Or+Is+It+A+Hobby%3F to Google Bookmarks Add Is+Your+Creative+Activity+A+Business+Or+Is+It+A+Hobby%3F to Stumbleupon Add Is+Your+Creative+Activity+A+Business+Or+Is+It+A+Hobby%3F to Reddit




Subscribe to Bellaonline Taxes Newsletter
RSS
Related Articles
Editor's Picks Articles
Top Ten Articles
Previous Features
Site Map


For FREE email updates, subscribe to the Taxes Newsletter


Past Issues


print
Printer Friendly
bookmark
Bookmark
tell friend
Tell a Friend
forum
Forum
email
Email Editor


Content copyright © 2014 by Kate Woods. All rights reserved.
This content was written by Kate Woods. If you wish to use this content in any manner, you need written permission. Contact BellaOnline Administration for details.

g


g features
The Taxing Subject of Taxes

Requesting an Extension of Time To Pay Your Taxes

Why We Pay Income Taxes

Archives | Site Map

forum
Forum
email
Contact

Past Issues
memberscenter


vote
Poetry
Daily
Weekly
Monthly
Less than Monthly



BellaOnline on Facebook
g


| About BellaOnline | Privacy Policy | Advertising | Become an Editor |
Website copyright © 2014 Minerva WebWorks LLC. All rights reserved.


BellaOnline Editor