Paging Tiffanie? Info for taxes?

[Velocity_X_Racing]

I was wondering if we will be receiving 1099 forms for our winnings in the 2002 year?  If so, when will they be sent out if they have not already?  And lastly, I have recently moved and would like to make sure I will be receiving all the necassary paper work.  Who do I have to contact for this information?


Best Regards,

Ryan Teixeira
Velocity X Racing
e-mail:tellurium2000@yahoo.com

[Lowe119]

Do any of you claim all these expenses? Trailers, gas, tires, etc??
My dad claimed all of his fishing stuff because he entered tournaments.....

[spyderchick]

Yes, you can claim your racing. Talk to an accountant in your area. There are limits and you need to technically be a "for profit" business. On your federal returns, you do this on a schedule C. You need to keep track of all of your expenses and have documentation to back this up. You also need to claim all of your contingincies and winnings. This could make you more likely to be audited, but I've known racers who were fine as long as all of the "t"s are crossed and the "i"s are properly dotted.
 
 My strong suggestion: Accountant, accountant, accountant.  

[FullMoonRacing]

Unless I'm mistaken, you have to actually MAKE money one in every five years for the IRS to recognize you as a "for profit" business.  ...And with good reason - without that clause, everybody and their brother would be claiming "for profit" businesses and writing off obscene volumes of stuff.

I know I'M not real terribly close to actually making money at racing.  

[ecumike]

OR you could start a racing business, claim/write off all your expenses and operate at a loss for 3 years for a tax break.  :)

[spyderchick]

Unless I'm mistaken, you have to actually MAKE money one in every five years for the IRS to recognize you as a "for profit" business.  ...And with good reason - without that clause, everybody and their brother would be claiming "for profit" businesses and writing off obscene volumes of stuff. 

That is true, but most racers are only involved in racing for 2-3 years. The initial start up is where you take the biggest hit. That's why corporations and other businesses get involved in motorsports. "Obscene volumes of write-offs".

No, a racer is not a corporation, but there is nothing illegal or unethical about using the tax laws to your personal advantage, provided you follow the letter of the law. As I've stated before, consult your local accountant.

[Jeff]

I spend a good share of money on accountants and lawyers each year to ensure I don't turn into Willie Nelson (oh wait, that would mean I get hair right?), and my conversation with my TAX LAWYER 2 weeks ago revealed that you really need to show profit 3 out of 5 years in order to keep out of audit zone.  It's no guarantee, but it'll keep you close.

If you run straight loss for more than 3 years, you will most likely be audited, the feds will say your "business" is more pleasure, and you'll end up paying taxes on everything you wrote off for those past 3 (or more) years.  Ouch...

Showing profit is easy...  Sell a few items on ebay, and only count portions of your expenses.

Showing loss is also easy (as we all know)...  

Depreciation is another key element.  You will end up receiving a depreciated adjustment for things like bikes, trailers, vehicles, and other large purchases.  They generally are written off over 5-7 years.

Again, get a lawyer or decent accountant who KNOWS what you are intending to do.  They will show you all sorts of things.  For example, how many WI residents knew that they are eligible to receive tax refunds on all fuel purchased for off-road use?

receipts - receipts and more receipts...

[spyderchick]

Amen!

[OmniGLH]

Well, from what I've interpreted in the Illinois law books regarding writing off hobbies (such as racing...)  You can only write off as much as you made in income from the hobby.

So if you made $5k in winnings, but spent $10k in expenses, you can only write off $5k.  

Keep in mind, then, that you also have to CLAIM that $5k in the first place.  So writing the stuff off is just kind of a wash to what you made in income. (add $5k to your income from the winnings, then deduct $5k from losses = 0)

Is CCS going to send out tax forms?  Cuz to be honest, I wasn't really planning on claiming anything from last year, since I only raced 3 weekends, and I doubt I even made $300.  I can claim several thousand, so it's not really worth me putting up with the extra paper work just to wash out $300.

[Jeff]

Well, from what I've interpreted in the Illinois law books regarding writing off hobbies (such as racing...)  You can only write off as much as you made in income from the hobby.

Exactly...  Which is why you run your "hobby" as a FOR-PROFIT business...

You can funnel as much as you want through a business.  A hobby, you cannot.

[skydiver19]

For those still wondering if you will receive a 1099 resulting from any winnings collected during the season the answer is yes. I got mine in the mail on Tuesday.

[OmniGLH]

Exactly...  Which is why you run your "hobby" as a FOR-PROFIT business...

You can funnel as much as you want through a business.  A hobby, you cannot.

Mwah HA!  You are on to something  ;)  Just keep in mind that your "business" has to show a profit after 3 years.  I'm looking into incorporating myself to take on a contract position... and may just have to write off some racing expenses  ;D  Just gotta slather my logo all over the place...