Originally Posted by
liese
I certainly agree with ghostrider. I wouldn't touch your return with a 10 foot pole or all the fabric in all of the quilt stores in the USA! Have you registered a legal business name? Do you have a Fed Tax ID # and a Sales Tax # for your state?
If you are selling a quilt for $200 and the fabric cost $100 - the cost of the fabric isn't deductible and you would pay tax on the profit which is the difference between the costs or materials you used and what you sold it for.
And especially if you are making most for family members or donating -- be sure to keep a separate log for what you actually sold. All expenses need to be pro-rated accordingly as well.
I personally have my own business making bags and quilts. I file state taxes qaurterly, and pay federal on the schedule C. I have only taken a small deduction for bussiness cards and internet usage. My accountant said that things that I had before the business started like the rulers ect were not deductions! I have reciepts for everything I buy to keep track of my spending and my income. My suggestion is to have someone else do your taxes-for the few dollars you are writing off you could end up in a costly audit.