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#1
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ANY ONE OUT THERE CLAIM RACING EXPENSES ON THERE INCOME TAXES? ANY INFO WOULD BE APPRECIATED.
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#2
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Claiming expenses is fine if you treat racing as a business. That means that you need to be racing for money and keep books like a business would. Need accurate records and be able to show that it is a legit business, not a hobby. Best way to show the IRS that it is a business is to make a profit on it. Of course, not too many racers are sharp enough to be able to make money at it. One thing you can do is to only take expenses equal to the income that you make. Then it is like gambling. You can't deduct gambling losses greater than gambling income, but you can deduct up to your winnings.
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#3
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I had our tax man set my racing up as a business two years ago. The deal is that you have to show a profit 2 out of 5 years or the IRS sees it as a hobby, and you can no longer deduct anything. Keep good records, car parts, gas for the tow vehicle or the car if you drive it to the track, mileage you put on the vehicle on the way to and from the track, motel bills, food, entry fees, tolls, any cost that you incur to go racing. If you keep your profit under $400 you don't have to pay Social Security tax on it either. I have had no trouble keeping the profit under $400, you can just re-arrange winnings and expenses to meet your needs. Any good accountant should be able to fill you in. Dennis
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#4
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The 2 years out of 5 profit requirement is what they tell you. The truth is that if you can prove that you are making a good faith effort to make a profit, it's a business. You can loose money for 20 years straight and still deduct your losses, even if they are greater than your winnings. This has been settled in court cases at the Court of Appeals level, I can cite actual case examples if anyone wants to know.
Just be prepared to go to court to prove it when you claim losses for that fourth year in a row. |
#5
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I am A CPA and my advice is unless its a REAL business
keep it off the tax return unless you are receiving 1099s for race earnings. Why risk an audit to save a few bucks? |
#6
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I,ve had mine set up as a business for years. I have a license, business cards, phone line, the whole show. Have NEVER shown a profit, some years are better than others, but always a loss. Last years loss was $11,000.oo. I have a professional tax preparer do mine and have never had a problem. A good tax person can tell you what will draw attention and what will not. Keep good records and all reciepts from truck and trailer maint, parts for car, race fuel, shipping, lodging, entry fees, tires and instead of keeping up with fuel costs, you are better off claiming mileage on your tow truck, not fuel usage. Just to be safe the first year keep track of every penny you spend and show the totals to your tax person, they can tell you what you can use, so the next year you only concentrate on those areas.
You can also depreciate your tow rig every year, the only downside is if you sell the truck or trailer that counts as income. But that is usually not a problem, as most of us use the money to buy a bigger trailer or a newer truck. A good way to start is to get one of the racing Log Books from Summit. It has spaces for all your expenses on the back of the sheet that you log your track info on. Monte Smith |
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