Kaufman & Forman, P.C.
Call to arrange a consultation
678-957-7769 | 770-390-9200
Contact Us
practice areas

Are you working a business or a hobby?

Georgian taxpayers like you have to follow a strict set of rules and guidelines in order to determine what sort of taxes you should be paying. If you are starting up a business, this can make your yearly taxes even more complex. For example, activities that you might consider hobbies may actually be businesses.

According to the U.S. Small Business Administration, the Internal Revenue Service has reported that there is up to $30 billion a year in unpaid taxes because of the improper deduction of hobby expenses. This is because not everyone follows the necessary guidelines when determining if something is a hobby or a business. It should be noted that any activity that is carried out with the expectation of earning a profit would actually be classified as a business rather than a hobby, which means that you should be deducting both necessary and ordinary expenses for those hobbies in regard to taxes.

Other things to look at include whether or not the activity earns profit over years, if methods of operation have ever been changed to increase income, or if you can live or depend on the income that you get from the activity. Additionally, even if you aren’t currently making a profit, your activity might be considered a business if you could potentially make a profit from it in the future. The general guideline is that an activity is for profit if it makes a profit in three of the last five tax years.

Sometimes, the line between hobby and business can be hard to define. This makes it important for you to understand where your activity stands so you can handle taxes appropriately.

No Comments

Leave a comment
Comment Information

Contact Kaufman & Forman, P.C. Now

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

get Legal Help Now

Kaufman & Forman, P.C.
8215 Roswell Road, Building 800
Atlanta, GA 30350

Toll Free: 800-461-5864
Phone: 678-957-7769
Fax: 770-395-6720
Atlanta Law Office Map

Robert Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the May issue of The American Lawyer & Corporate Counsel magazine.Alex Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the December issue of The American Lawyer & Corporate Counsel magazine.

*AV Preeminent and BV Distinguished are certification marks of Reed Elsevier Properties Inc., used in accordance with the Martindale-Hubbell certification procedures, standards and policies. Martindale-Hubbell is the facilitator of a peer review rating process. Ratings reflect the confidential opinions of members of the bar and the judiciary. Martindale-Hubbell ratings fall into two categories: legal ability and general ethical standards.