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Author Topic:   Taxes
Rat Trap
Dirt Maniac

Total posts: 129
posted May 11, 2005 02:17 PM  
2004 was our first year of racing. We were told to keep all our receipts and everything related to our racing operation so we could deduct a portion of it on our taxes. We did that, and at tax time the car owner filled out a schelude C form. Well after weeks and weeks of calling the IRS to find out where the return was he finally got ahold of someone that could help him. They said that he couldn't use the Schelude C unless he registered the racing as a bussiness. And they couldn't help him as to how to go about doing that. So he has for the mean time refiled his taxes without the raceing part on it. And was told he can do an amended return on the racing part of it later.

Now my question: Those of you that file taxes on your racing, what form do you use. Can you send us in the right direction on what to do? Thanks

Kromulous
Dirt Forum Champ
Total posts: 796
posted May 11, 2005 02:25 PM  
I think you have to file for or get a tax ID number, like a buisness. Court House is where i got one for my Lawn mower repair buisness many years ago.

The other taxes issues, no idea.

FlyNLoIMCA17
Dirt Forum Champ
Total posts: 753
posted May 11, 2005 04:12 PM  
I have no tax # or anything. I take all my reciepts and my W2 form to my accountant and he does it, so I really don't know what all it consists of, but I do know that I don't have any special tax #. Also my returns are usually NICE!!! Racecar helps out!

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mdsteacher
Dirt Maniac

Total posts: 145
posted May 11, 2005 04:37 PM  
My brother is an accountant. Both he and his partners are very leary of claiming your racing expenses on your taxes without first properly setting it up as a business. You can go the hobby route, but chances are increasing that you will be audited. The IRS is very aware of the thousands of racers (circle track, drag racing, boat racing, etc.) each year that file each year claiming a loss to their hobby or business. More and more of these racers are being audited.

The safest way to claim your racing expenses is to set it up as a legitimate business, which includes a tax ID number as well as a separate bank account and separate phone number (not your home phone) and a PO Box wouldn't hurt either. You should have activity with your bank account that shows both expenditures (buying parts, etc.) and credits (race winnings and sponsorship dollars). As long as you can demonstrate that you have a hobby that you are trying to profit from, the IRS can't argue with it.

I also believe that you can only show a loss on your taxes for your business for 3 years (correct me if I'm wrong).

I'm not trying to scare anyone away but one person's luck of not getting caught isn't enough to convince me it is right or even OK to do.

FlyNLoIMCA17
Dirt Forum Champ
Total posts: 753
posted May 12, 2005 05:17 PM  
I was thinking you could claim a loss for 7 years?? May be wrong though.

If I do have a tax ID then I don't know about it. I do remember my accountant needing the name of my racing team, and he said after X-amount of years of claiming a loss we had to re-name the team. I might have an ID # but I'm not sure.

dirtracer14
Dirt Forum Champ
Total posts: 1261
posted May 12, 2005 09:33 PM  
I dont have a tax # and claim allmost every year....Most years i show a profit of some kind and when i need to i write a ton off as a loss that year. As long as it shows that i profit i dont think it brings up the red flag.

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