SueSew

So true. Not worth a few bucks to start an argument you can't win. Before you know it you're a sitting duck looking down the barrel of an IRS shotgun, and that is not a good place to be. A lot easier for them to pick on things like this than try to bring down Enron!

0tis

With the IRS - the burden of proof is on the taxpayer - so you must be able to document all business expenses - otherwise they might not be allowed then penalties and interest can be added - its really a sticky situation when its a home business - now if you have a brick and mortar store then its so much easier to document and claim all your income and expenses - just keep the personal stuff separate.

catlinye_maker

Just to add to what everyone else has said: the IRS considers that to qualify as a business you have to make a profit two years out of five. If that's not the case, then it's classified as a hobby, and not deductable.

LindaM49

Exactly. I DO have an in home business...not sewing or quilting. Our tax guy explained everything to me about hobby/business. I pour candles...have been since 2000. I have a separate workshop...do not sell out of it though. I do craft shows and I have a Christmas Open house here in my home. I also DO sell candles to people...but like I said...I don't have a store. Anyway...I do NOT use my workshop as a tax writeoff. As someone else said...our tax guy also told us that IS the biggest red flag to end up being audited. The only thing I do is income/expenses...there's a name for it but I can't remember it now...lol. I have actually kept ALL of my receipts since the day I sold my first candle. I do have a PA sales tax license so when buying supplies in state I don't have to pay 6% sales tax on them. But...as soon as I sell candles I have to report and pay the 6% sales tax that I have to charge the customer.

I would be scared to death to try to declare stuff that isn't really legit.

joyce888

The only fabric I write off is for pillowcases for the Conker Cancer Org. and I've gotten a receipt from the organization.

sewbeadit

There is so much to taking a business off of your taxes I would not touch it either. Red flags all over.

msquiltalot

Really interesting topic. I've given some thought to the business end of quilting and I'm thinking I really need to rethink it. Doesn't sound like a good idea unless you're quilting as a business, ie. longarming.

pinkberrykay

I had a Photography business and my accountant wrote off the square footage of the space my computer table took up and nothing else. I do outdoor photography so I never used my home.

QuiltingGrannie

Do you have a business license? Tax ID number? File quarterly tax reports? Insurance on your business? There are certain criteria needed to be a business and being able to have deductions. I'd be careful.

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.