So I was doing my taxes today and under deductions you can deduct the cost of happiness (hobbies).
So if anyone is a CPA or tax law knowledgeable, does this mean I can claim all 5k that I've spent on mods for my car? all of them were during the last tax year. Please say its so!!!

 

Interesting point, someone please answer this

 

I looked up the definition for a hobby and how it applies to this and it said this:
a hobby is an activity that is deemed to not be carried out for a profit. this is determined by the facts and circumstances. For example

the manner in which the activity is engaged in
Your experiencee in the activity
the time and effort put into the activity
The expectation that the activity will generate income
Your past success or failure at generating income with the activity
elements of personal pleasure or recreation associated with the activity.

Cutlr had a point that modding could be viewed as the upkeep to your car but not a hobby. But isn't racing a hobby? millions of people watch those hicks drive in a circle every weekend.

 

Nice try but definitely not....

Hobby is a nice word the IRS uses to DISALLOW losses. Of course the would never argue if you showed a profit

 

are you an accountant?

 

you can claim a hobby if you use the items to try and make a profit.

For example if you buy a computer and use it to make websites for people for money, you can claim the computer as a deduction.

BUT, if you also use the computer for surfing the net 50% of the time, only 50% of the price is deductable (50% of the item used for making websites)

If you say you mod your car to show to win cash prizes, you can claim your mods and stuff. BUT if you also drive your car to work, and only spend 5% of your time at car shows, only 5% is deductible.

Also, this is only useful to people that itemize.

 

SLC r u crazy, man? I think the only way you'd get a deduction if you used your car to advertise your business...if you're self-employed or incorporated. Can you afford to claim yourself as self-employed? Dang than your car payments and insurance, even oil changes are tax deductable.

 

you can own a business and not be self employed as your main source of income. many people have small (tax deductible) business on the side. You just have to make sure it does not look like a tax shelter.

 

Well the forms don't show percentages of winnings to price. I've won money and other things from racing Auto-x. So there for I could.
But again are any of you an accountant? I read the IRS web page about this, thats why I have these questions. I know I can use my car once I get my business license but I'm looking at this tax season. I would've never thought about this if I wasnt' forced to itemize anyhow.. But again, are any of you accountants? I don't want BS posts from people who are just skeptics I am already skeptical that why I'm asking.

 

I'm an engineer not an accountant, but by owning a house, buying and selling stocks, paying tution, etc, I make sure I read the IRS regs.

Per h&r block the most families can increase their refund by $600 but don't because they are to conservative.

 

SLC why dont you pay a fee and see an accountant? I have one strong point to make to you, though. You said you dont have your business license YET, but you ALREADY have spent money on mods. Therefore, you are not eligible. You may become eligible for deduction after formation of business...

 

Kon, your missing the point as strong as your trying to be.
I am not trying to create a business expense, and I'm going to get this spelled out from a tax attorney. In the mean time I was hopin to get an explaination from an accountant, or from someone that had some factual basis to their opinion and THE MAX has been the closest one to do so.

Max-I understand your post as well, and this is one of the hundred gray areas where people if they've spent foolishly over the year can make up for a percentage of it. I've never used H&R block, but I've never read about their audits coming up bad.

 

good luck with your accountant. Let us know what happens.