tax deduction question?

[bdane]

I know I know...this has nothing to really to do with gear but I was hoping to get some feedback on this. How many of you out there write off your equipment for your home based studio?? Cause I just finished doing my taxes and as I was using TurboTax, I started writing some of my equipment off. I wrote off my digi 002, Macbook, and Mackie 1604. I didn't really think it would be approved, for I do not have a business permit, and anything like that, but I filled out the form that way (stating that I have no proof of running a buisness). Anyway, I got it approved and was about to send it in untill my friend started telling me horror stories about his buddy who got busted doing a similar thing with his "video company". Just trying to get some feedback as to how other people handle this.

[jdjustice]

i don't know the legal ramifications of this procedure, but i believe it is necessary for you to generate income from recording in order to write off the gear.
IOW, you must be a 'professional' that gains money from the use of your equipment.

i could be wrong; this is just what i have heard.
be careful of claiming deductions that may be audited at a later date....


cheers
~j.d.

[Chris]

Well. This seems like a good place to talk about this.

I was bringing up with some of my older friends the topic of becoming a buisness so I could write off my gear purchases in the future since that's pretty much where all my money goes. I asked them how soon I want to do this and they told me "as soon as possible."

One of them mentioned that I might be able to register as a non-profit business since I'm not actually making money (just paying off gear)?

Anybody with any small business advice, it would be awesome to hear from you.

[s0nguy]

You cant register as a non profit...

Go down to your local govt office and get a DBA. Boom youre in business and everything you buy pretaining to your business is deductable. You can lose money the first few years but you need to eventually show a profit.

-s0nguy

[Dr Benway]

If you're earning a taxable income from your studio, be it home or otherwise, than you can write off any 'new' equipment purchaces.. Here in OZ I get back the GST + I can also claim a depreciation value on my new gear and some other bits and pieces.. I have a registered business which has tax file # and most important of all.. A bloody good accountant!!!
To me.. Dealing with the tax office is a pain. I've got better things to do with my time. So don't give them reason to bother you! Tax is as certain as death as the saying goes!!!

[Matt Hepworth]

Here's a great thread that really helped me.

http://gearslutz.com/board/showthread.php?t=103486

[HudHudson]

As long as you are actually offering services for a fee, you can reasonably take advantage of most business deductions, including the Sec 179 expense (immediate write off of up to $100K of capital expenditures). You may, like many recording enthusiasts, never make a dime but you do have the burden of proof to convince the IRS that you were in business and not participating in a hobby. Find a CPA who has some experience in this area before you expose yourself to an audit and possible penalties.

[Mike O]

Spend $50 with an accountant. But most of you will not.

The biggest mistake "small business owners" make is combining businesses. You cannot for example be a professional landscaper, chef, painter, etc. and "write off" as expense or depreciate recording gear against the profits of the other business.

Each business stands on it's own. Then there is the issue of "hobby" vs. business.

Good luck.

[clip6]

Again get a CPA. Best investment you can make. Start a relationship with someone now. The more money you make the more you'll need someone to give you advice. I've had a CPA since I was 15. Your CPA can also be your business consultant. Someone to bounce ideas off of.

[CorkyTart]

Get quickbooks for $200 keep every frickin receipt and log it in the computer under the appropriate expense account. For example, you can deduct your Manley Massive Passive, you can even write off your $300 brake job on your car if its used for business but you cant write off a trip to Great Adventure (Unless you brought a client) nor could you write off a trip to the grocery store (Unless you bought chips and drinks for the studio) Get what Im saying, you can write off quite a bit....

If you are going to write off a home office/studio expense, that is a red flag if you suddenly change sq footage etc. However, it will cost you $9 for a business DBA permit at the County Clerks office. Do that, get a business acct and treat your business as a business.

[Mydog_Nixon]

I have been writing off equipment expenses for the last few years for my home studio. I do a lot of post work from home and I am able to write off everythings having to do with the business including gear, magazines, movie tickets, supplies etc. The key is to find a good tax preparer that specializes in entertainment and keep good records. I keep all reciepts and use Quickbooks.

[charles maynes]

Originally Posted by s0nguy

You cant register as a non profit...

Go down to your local govt office and get a DBA. Boom youre in business and everything you buy pretaining to your business is deductable. You can lose money the first few years but you need to eventually show a profit.

-s0nguy

It is not quite that simple- In California you can directly deduct about 15k in capital investments-

It does look best when you have some income to back up the deductions as well.


charles maynes

[redrue]

better to beg forgiveness than ask permission...



























... just kidding!!!

[Engine Room]

Heh...watch this.

America:From Freedom to Fascism

[Tommy-boy]

Originally Posted by bdane

I know I know...this has nothing to really to do with gear but I was hoping to get some feedback on this. How many of you out there write off your equipment for your home based studio?? Cause I just finished doing my taxes and as I was using TurboTax, I started writing some of my equipment off. I wrote off my digi 002, Macbook, and Mackie 1604. I didn't really think it would be approved, for I do not have a business permit, and anything like that, but I filled out the form that way (stating that I have no proof of running a buisness). Anyway, I got it approved and was about to send it in untill my friend started telling me horror stories about his buddy who got busted doing a similar thing with his "video company". Just trying to get some feedback as to how other people handle this.

I cringe when I see threads like this. Read my post in the thread Glitch referenced.

Then ask yourself - are you running a business or not? Then find a competent CPA to help you with your taxes. Don't just use any CPA. Ask around and get references. You want a CPA who will get you the best answer possible without exposing you to risk. A good CPA can be a tremendous asset. On the flip side, a CPA who fabricates fantastic deductions to get you big refunds can cause you all sorts of damage down the road.

Also, don't believe all of the mumbo jumbo in this thread because people are throwing around terms like Section 179 deductions. By the way Section 179 deductions have limitations, none of which have been mentioned in this thread.

-Tommy

[Engine Room]

and once you're done filling out all of those forms, with a cold beer in hand...

Originally Posted by Engine Room

Heh...watch this.

America:From Freedom to Fascism

[stevep]

Originally Posted by s0nguy

You cant register as a non profit...

Go down to your local govt office and get a DBA. Boom youre in business and everything you buy pretaining to your business is deductable. You can lose money the first few years but you need to eventually show a profit.

-s0nguy

TRue Get your Business License before you file as a business,

Loosing $$ for a few years shouldn't be hard to do in this business

But do it to long and they WILL catch up with you


Plus in order to write off anything you need to have a profit for it to help you

so i dont get your question,..... Unless you are trying to show a loss to get more money back from some other income.


Call a good Tax person and have them do your taxes it might save you some worries

[JohnRoberts]

Of course don't take tax advice from a gear web site (even mine), but it seems the advice given by the IRS isn't all that reliable either.

My understanding is that you can write off losses and depreciate capital expenses if you have a real business. The IRS has a simple test for that. I real business doesn't lose money every friggin year.

You don't have to make a profit every year and have X years to get a start up rocking, but extended serial losses are a hobby and not deductible.

Get thee to an accountant at least the first year to get your books set up etc.

JR

[Sqye]

..,

i'd like to know if i can write off a cuppla people i know ....



..

[Engine Room]

yeah, like all of those government employees my tax dollars pay the salaries of!

they're...DEPENDANTS!