Taxes and Miles Driven

[BoomerD]

That's why there's confusion. Posters have assumed that I thought the gov't was giving me money, even though I clearly laid out in my OP that I was only asking about that 40k which I would have earned as income.

No, I do not think the gov't is giving me money. I wanted to know whether I'd have to pay taxes on that 40k, considering that it would have been deducted via miles driven. And whether I could keep that 40k, or had to put it back into that business (perhaps in the same year), etc.

Will you say more about itemizing, etc. in order to take mileage?

I haven't had to do taxes in about 10 years (other than my own) so things may have changed...and I've probably forgotten stuff...so best you read on the IRS website.

 

[skull]

That's why there's confusion. Posters have assumed that I thought the gov't was giving me money, even though I clearly laid out in my OP that I was only asking about that 40k which I would have earned as income.

No, I do not think the gov't is giving me money. I wanted to know whether I'd have to pay taxes on that 40k, considering that it would have been deducted via miles driven. And whether I could keep that 40k, or had to put it back into that business (perhaps in the same year), etc.

Will you say more about itemizing, etc. in order to take mileage?

When you say things like pocket and paid by mile it makes it sound like you think youll get it as a refund.

What kind of car do you plan on using for this? If you go new your going to lose 10-20k to depreciation in a year plus tires, brakes, oil changes, etc. If you go used your still going to have depreciation and maintenance plus more break downs, tow bills.. When you tell your insurance company you are driving 85,000 miles a year for business your rate is going to go way up. Granted you'll come out ahead on your taxes, its not going to be 40k ahead though.

As a sole prop my business deductions are separate from personal I file a schedule c and all that jazz to itemize business expenses. My personal is separate and I still take the standard deduction. Thats how turbo tax business has always had me do it anyway.

 

[BoomerD]

When you say things like pocket and paid by mile it makes it sound like you think youll get it as a refund.

What kind of car do you plan on using for this? If you go new your going to lose 10-20k to depreciation in a year plus tires, brakes, oil changes, etc. If you go used your still going to have depreciation and maintenance plus more break downs, tow bills.. When you tell your insurance company you are driving 85,000 miles a year for business your rate is going to go way up. Granted you'll come out ahead on your taxes, its not going to be 40k ahead though.

As a sole prop my business deductions are separate from personal I file a schedule c and all that jazz to itemize business expenses. My personal is separate and I still take the standard deduction. Thats how turbo tax business has always had me do it anyway.

 

[JEDIYoda]

As a photographer, I believe that would be easy; almost everywhere is a wedding shoot, a portrait session, a landscape with the potential of being sold as a print, etc.

Of course I wouldn't count miles driven to Wal-Mart for regular shopping, etc.

You still would need to be able to account for each and every mile via documentaion! To ans from plus the miles! Plus you would need to prove that being a photographer was your livelihood!

 

[BoomerD]

You still would need to be able to account for each and every mile via documentaion! To ans from plus the miles! Plus you would need to prove that being a photographer was your livelihood!

Job (for profit business) not hobby...

 

[s0me0nesmind1]

Job (for profit business) not hobby...

Having a spiral notebook in your car and writing down things like the date, time, location, and mile meter is sooooooooooo hard and challenging!

 

[BoomerD]

Having a spiral notebook in your car and writing down things like the date, time, location, and mile meter is sooooooooooo hard and challenging!

yeah...there's a lot more to it than that.

 

[Ruger22C]

You still would need to be able to account for each and every mile via documentaion! To ans from plus the miles! Plus you would need to prove that being a photographer was your livelihood!

I can't have this business, which earns a little money, and also a programming career, which primarily supports me?

Or my livelihood can't come from social security, because this business has not yet progressed to the point of being my livelihood?

 

[BoomerD]

When the IRS Classifies Your Business as a Hobby

If your business claims a net loss for too many years, or fails to meet other requirements, the IRS may classify it as a hobby, which would prevent you from claiming a loss related to the business. If the IRS classifies your business as a hobby, you'll have to prove that you had a valid profit...

turbotax.intuit.com

 

[gill77]

I can't have this business, which earns a little money, and also a programming career, which primarily supports me?

Or my livelihood can't come from social security, because this business has not yet progressed to the point of being my livelihood?

You need to think of this in terms of matching revenue and expenses, and the business purpose to those expenses.

If you drove the country taking pictures and sold them for several hundred $K then your 50K deduction would seem reasonable.

If you sold a $2.25 postcard and tried to take $50K deduction against that income, it would not meet the reasonable business expense criteria. Aspirations of selling high dollar photos next year will be judged next year.

 

[s0me0nesmind1]

yeah...there's a lot more to it than that.

As far as mileage? No... not really

• At the start of each trip, the taxpayer must record the odometer reading and list the purpose, starting location, ending location, and date of the trip.
• At the conclusion of the trip, the final odometer must be recorded and then subtracted from the initial reading to find the total mileage for the trip

 

[Ruger22C]

You need to think of this in terms of matching revenue and expenses, and the business purpose to those expenses.

If you drove the country taking pictures and sold them for several hundred $K then your 50K deduction would seem reasonable.

If you sold a $2.25 postcard and tried to take $50K deduction against that income, it would not meet the reasonable business expense criteria. Aspirations of selling high dollar photos next year will be judged next year.

No intention of doing that, because I don't want to get classified as a hobby. Even if my business could claim a loss, I'd probably just hold back some of the expenses and consider them to be personal expenditures instead.

 

[BoomerD]

As far as mileage? No... not really

Agreed...but you replied to my "Job (for profit business) not hobby..." post...which is why I said there was a lot more to it...
mileage is easy...proving to the IRS that it's a business not a hobby can be more difficult.

 

[JEDIYoda]

I can't have this business, which earns a little money, and also a programming career, which primarily supports me?

Or my livelihood can't come from social security, because this business has not yet progressed to the point of being my livelihood?

In actuality the short answer is NO!! Nobody especially the IRS is going to believe that every mile traveled in your car was for business purposes!
In fact they will want receipts and will not take the excuse -- I was paid in cash!1 But if you have bank deposits to show then that can be construed as proof!
You are in for quite a bit of work proving that this was a 2nd job and not just a hobby....

 

[Ruger22C]

In actuality the short answer is NO!! Nobody especially the IRS is going to believe that every mile traveled in your car was for business purposes!
In fact they will want receipts and will not take the excuse -- i was paid in cash!1 But if you have bank dep[osits to shoe then that can be construed as proof!
You are in for quite a bit of work proving that this was a 2nd job and not just a hobby....

How did we get to the assumption that I was going to declare that every mile driven in my vehicle was for business purposes? I don't recall this ever being discussed.

 

[Lost_in_the_HTTP]

I can't have this business, which earns a little money, and also a programming career, which primarily supports me?

Or my livelihood can't come from social security, because this business has not yet progressed to the point of being my livelihood?

In those cases, you could claim ONLY the miles directly to and from any paying shoot. If you stop off to get groceries on the way home, those miles have to be deducted.