Does anyone run their quilting as a business and deduct all their fabric?
#41
Super Member
Join Date: May 2010
Location: Washington state
Posts: 4,303
I think I would get another accountants opinion. this just doesn't sound right to me. I am fairly certain you cannont use any materials you bought and used in personal quilts or to give away as a deduction. My quilting friends who have businesses related to quilting have to declare how much was used for personal vs business. i also thinbk you can only deduct the mileage directly related to business expenditures
Be Careful you do not need IRS problems
Be Careful you do not need IRS problems
#42
And I thought UK tax law was complicated! I run a business from home, and as long as you have receipts, and can justify the expense against your business, then you can. Mind you, I have a great accountant who manages to find me savings every year.
I think I will stay right here in the UK - no moving to the States for me!
I think I will stay right here in the UK - no moving to the States for me!
#44
Super Member
Join Date: Nov 2010
Location: Jozefow, Poland
Posts: 4,474
What about all the people who are self employed? Does this mean they are red flagged as well? I'm self employed. I don't claim thousands of dollars on my quilts. I claim the loss of what the quilt cost, including long arm quilting and driving to buy the fabric, and the notions I use to make the quilts...
Don't worry about it. If you are keeping tabs, keeping receipts, and doing your taxes legally, do not stay up all night worrying. Some people are better off if they aren't self-employed as they don't have the personality for it.
I also wondered why so many objected to this. People who are self-employed do get to take off some of their expenses, but of course, not everything.
If it came about to be a problem that you aren't making money after 3 years, just don't declare some of your expenses for a couple of years so it looks like you made a profit-- if only $10 to keep the qualifications as a business.
It sounds like your MIL knows what she is doing. And she knows your situation better than any of us. I'd let her be my guide.
#45
I see nothing wrong with what you have done. We had a business out of our home for about 5 yrs. I sold purses and a few other misc things on EBAY...It was totally legal, we had a tax ID, we kept a log on the pc of everything we sold and bought and I even deducted the mileage to and from the stores I went to. I never got audited. But I'm not concerned if I do b/c of the accurate log and receipts of EVERYTHING....I don't think you have anything to worry about...I"m sure your MIL knows what she is doing. I agree " I think some people misunderstood you"...Good luck with your quilts...
#46
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.
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.
#47
Super Member
Join Date: Jul 2010
Location: Ohio
Posts: 2,148
Per IRS- an area for a home business must be used "exclusively " for that business. This means that you are not to use this area for any other use than is related to the business. EG. accessing computer to check personal emails. (such as table in kitchen used for crafting for profit may not be used to eat on or kids do home work) Your comments brings up this issue as to the use of the area for making quilts for selling AND personal use. I would be checking with another tax professional to see if you can deduct the room as a expense. Better to be safe than audited. Also IRS says that ALL income must be reported including $ for ebay, craft shows, garage sales, tips ets. Do people do this?????? Unfortunally our current tax code make it to easy to fudge numbers.
#48
Super Member
Join Date: May 2011
Location: Oregon
Posts: 1,614
I'd also be careful what I put on this message board -- the IRS can access this board, too! Not being paranoid, but I stay well clear of any questionable deductions, as I've seen what the IRS does to folks.
#49
Super Member
Join Date: Jan 2011
Posts: 1,812
I think you don't need to defend yourself. IMHO. I have explained this over and over to my son why I won't start a business sewing/quilting since I cannot get hired (too little jobs, too much competition here in our area). Very little profit and under appreciated. Many years ago I did a home daycare. I put my income on our taxes (I was not licensed) but I did not deduct one thing for supplies, food, electrical/heating-nothing. I knew 30 years ago when I 'babysat' that no way was I going to get involved in explaining anything to anyone why I felt I should/could be compensated for my space and money I spent on caring for other people's children (which I loved doing but there was very little money to raise a family). I made sure the amount I charged covered my expenses. Same thing this family member is doing. Even though he is entitled to deduct certain expenses. We suggested he get a highly reputable tax accountant to do his taxes. Trust is a huge thing. Sometimes you can't win an argument you didn't start. I hope you have a wonderful day and can forget all about this.
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