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Location: by the coast but used to be by the Iowa river
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Filing taxes as a Demo????
It would be a dream come true to be a SU! demo, but one major concern is taxes. I would appreciate your input re: figuring out taxes, which form, how it works, etc. Isn't it something about, if you "make" less than $600 a year then you are tax-exempt? Can someone tell me?
I believe that only the IRS can accurately give you the information you need. For the most part, you have to report every dollar you earn whether it is from wages, business income, farm income, rent, sales, retail, etc, etc, etc. After you list everything, then you can deduct all the various expenses.
Perhaps SU might have advice on which IRS forms you should be using. My guess is business income (but I'm not a demo). Being involved in several other businesses, we finally gave up doing our own taxes and hired an accountant. It was well worth the cost.
Note: Special cases such as retirees, disabled etc. are allowed to earn a minimum amount without losing their Social Security benefits.
It was my understanding from all the other demo's that as long as you spend at least what you earned as income that you don't have to worry about taxes. You can only claim a loss 3 years then the IRS says you are a hobby demo and don't look at you. I have spent MORE than I made because I am my own best customer so I am not worried about the tax end of things now.
If you are a demo and make less than $600 a year, the IRS considers that a hobby, not a business. So if you make $1200 and spend all of that on stamps and supplies for your business, you have no income.
So, no matter how little you end up making (less than $600), do you still have to file all the paperwork? If I'm only a demo to get the discount and have a handful of friends buying through me and my total "income" after what I spent to "support my hobby" is less than $600, do I still have to file the schedule c and/or any of the other forms just to show the IRS that I'm doing this as a hobby instead of a business, or do I keep my records, find that I'm not making any money and wait for the IRS to come knocking and show them I don't make anything? Make any sense? I know I'm confused!
If you consider yourself to be a "hobby" demo and are not running your stamping endeavor like a "business" and make nominal or no income (or have a loss), then to the IRS it's not a taxable venture and they don't care. SU doesn't send them anything to say that you're running a business that would require you to explain anything to them.
If you are running it like a business and want to claim any losses in the first year or two (you spent more than you made getting your business up and running), then you have to have good records and file the Sch. C. to be able to prove that your are running a legitimate business and are not just trying to "write off" your hobby.
I am wondering about this too. I have been a demo since August 03. I have been taking a loss for 4 months of 03 and all of 04. Can I claim a loss for 05? What about 06, because I didn't sign up until August 03.
Filing taxes as a Demo????
