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Author Topic:   Tax Time - Racing as a Business or Hobby
Flanndad
Member
posted January 27, 2004 05:24 AM
Just wondering how many of you are claiming your expense as a business?
Have you had any trouble?

This was my first year back, and my expenses were about 10 time's my profit. (The wall and motor didn't help)
Wondering how this will work?


Drogo99
Member
posted January 27, 2004 06:44 AM
I do go see my accountant this Thursday.
I was figuring out all my mileage and running mapblast to get accurate maps to turn in.

Last year my acountant gave me a rough idea of about 30% of my loss back.

Any idea what mileage is worth?

allzway
Member
posted January 27, 2004 07:53 AM
I am setting up everything to be a business. It is a tricky situation.

I recommend you buy this book that Speedwaymotors sells. "New Racers Tax Guide"
Part# 91085090 and sells for $10.95



[This message has been edited by allzway (edited January 27, 2004).]

Flanndad
Member
posted January 27, 2004 07:58 AM
I already have that book, there is alot of good information in it.

I was just wondering what everybody is doing or running into.

Raz_900
Member
posted January 27, 2004 10:58 AM
For federal taxes you can't deduct more than 2% of your income or upto hobby earnings. So, it's pretty useless.

I'm looking into making the racing a not-for-profit organization. That seems to be the way to go. You can give sponsors receipts that are tax deductible and in some situations not pay sales tax. I'm thinking of just making 2 checking accounts and when the racer needs money, transfer money over to the business account and write myself a recepit for charitable donation. Since the government takes like $8k of my money for federal income tax, I can give quite a bit (and deduct it) and still pay thousands in income tax. And my sponsors would get a side benefit of deducting it on their taxes too.

jonniet
Member
posted January 27, 2004 04:22 PM
The key is always refer to your racing as a buisiness not a hobby....all you have to do is show the potential to earn an income and keep track of all your expences and earnings and be prepared to pull these records in the case of an audit......it has worked for us with a good tax man.


sleadhead44
Member
posted February 01, 2004 02:49 PM
Raz_9000, Non-Profit Organization?? No doubt fitting in most cases but a different approach. Would love to know if it works. Good Luck!!!


flanndad#17
Member
posted February 09, 2004 05:07 PM
Just to let everybody know, I went to my accountant.
Just as the other post said always refer to it as a business. With a hobby you can only claim your losses that equal your earnings. But as a business you can claim all of your losses.

My accountant said next year to try to double my profit, if that by sponsors or winnings he don't care. It just helps to show that you are working towards making it profitable.

By the way I got almost 1/3 of my claimed losses back.
It is definately a business.....

Hey sleadhead44 did you race last season at winston or thunderbird. Just wondering which car and which class you raced.

I'm the safety yellow Cutlass #17 in the street stock class.
Not a great first year back for me, but i got some idea's on what the problems were, can't wait to see if i'm right.


sideways
Member
posted February 10, 2004 03:51 PM
Hey sideways, it shouldn't be to hard to double the (I guess income is a better word, than profit)Income.
A couple more sponsors or a few more top tens and it should be well in reach.

The income last year wasn't very high.

sideways
Member
posted February 11, 2004 06:50 PM
Mine neither.I was also thinking that maybe income could come in the form of "contratcted labor sponsership"aka a experince friend helping out.Or borrowing some tools etc.


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