Racing and your income tax return?

zerospeed · 9/26/14, 3:05 AM

So how do you guys work racing and your taxes. I have traditionally just wrote off up to what I made and that's it...so if I spent $15000 and made $5000, I just write off $5000 and stay even. But after some thinking, if I won a ton of money and it exceeded my expenses they would surely make me claim it. I won one measly race this year and it only paid $800....so I definitely spent way more than I won. If I won 15 races at $2000 to win in the series I was running I'd have made about $30k and spent about $18k this year. I bet I won about $9k and spent $18k...so, don't I deserve to be able to write the rest of those expenses off? I know the whole "hobby loss" thing and all that, I've read up. But like I said, those clowns would make me pay if I won more than I spent. Any experience out there?

AustinSprinter · 9/26/14, 7:32 PM

yup!!..anytime there is $$$$ involved, you can count on the IRS get'n their share n then some!!..SAVE ALL RACE RELATED RECEIPTS!!...back when I Raced two wheels (Class "C") for $$$$!!...I saved and claimed lots more cash receipts for parts, than I actually paid for, out of pocket, for a yearly Income Tax LOSS!!..or a good plus($$$$)for me, Tax return !!!....it always worked for me back in late '60's.....prolly need ta be much more cautious now days tho, with all the Modern Tools they use now......
_____________
Brucer'

racer-x · 9/26/14, 9:38 PM

Quote:

Originally Posted by zerospeed

So how do you guys work racing and your taxes. I have traditionally just wrote off up to what I made and that's it...so if I spent $15000 and made $5000, I just write off $5000 and stay even. But after some thinking, if I won a ton of money and it exceeded my expenses they would surely make me claim it. I won one measly race this year and it only paid $800....so I definitely spent way more than I won. If I won 15 races at $2000 to win in the series I was running I'd have made about $30k and spent about $18k this year. I bet I won about $9k and spent $18k...so, don't I deserve to be able to write the rest of those expenses off? I know the whole "hobby loss" thing and all that, I've read up. But like I said, those clowns would make me pay if I won more than I spent. Any experience out there?

Get a good tax guy. You can easily save what he costs you in the long run.

wrtracing · 9/27/14, 12:00 AM

I don't profess to know alot about taxes but there are a few things I do know. If you are saying your racing is a business and writing off expenses then it must occasionally show a yearly profit or the IRS will tell you it isn't really a business and won't allow your deductions. You can write off what ever expenses you want but if you are audited, and you will be if there are some red flags because of expenses, then the IRS will decide what is allowable for you to write off. Anything that you previously have written off that they say isn't allowable you will receive penalties that must be paid that will include interest. They will go back as far as they deem necessary. So be careful!!

Joey Woods · 9/27/14, 6:10 PM

Way to many variables involved to be answered on a message board. I'm going to assume by your questions and assumptions you're not using a CPA to prepare your tax forms. Ask around and find one in your area. They are not nearly as expensive as most think. Do not confuse a CPA with a tax preparer or assume they will do for you what a CPA will do for you. And for the LOVE OF GOD, I don't care how intelligent one thinks he/she may be do not prepare your own tax forms when any relation to business is involved no matter the size or dollar amount.

Your racing may or may not recognized as a business but there could and probably are tax breaks available to you that are very beneficial and completely legal.

Scooter23 · 9/27/14, 8:18 PM

I was audited many years ago when was racing dirt sprints and had it all set up as a business. I feared the worst even though I had documented everything, since I had heard Big Brother didn't look kindly upon racing as a business. The only thing they got me on was trying to write off a motor at the end of the year. They said it had to be depreciated. As they say in business, 'PAPER THE FILE!'.

9/27/14, 12:00 AM	#4 Re: Racing and your income tax return?
wrtracing Senior Member Join Date: May 2013 Posts: 343	I don't profess to know alot about taxes but there are a few things I do know. If you are saying your racing is a business and writing off expenses then it must occasionally show a yearly profit or the IRS will tell you it isn't really a business and won't allow your deductions. You can write off what ever expenses you want but if you are audited, and you will be if there are some red flags because of expenses, then the IRS will decide what is allowable for you to write off. Anything that you previously have written off that they say isn't allowable you will receive penalties that must be paid that will include interest. They will go back as far as they deem necessary. So be careful!! __________________ WRT There is only one success - to be able to spend your life in your own way. Christopher Morley

9/26/14, 7:32 PM	#2 Racing and Filing Income Tax Return??....
AustinSprinter Senior Member Race Count This Year: (22) Race Count Last Year: (29) Join Date: Sep 2007 Posts: 4,428	yup!!..anytime there is $$$$ involved, you can count on the IRS get'n their share n then some!!..SAVE ALL RACE RELATED RECEIPTS!!...back when I Raced two wheels (Class "C") for $$$$!!...I saved and claimed lots more cash receipts for parts, than I actually paid for, out of pocket, for a yearly Income Tax LOSS!!..or a good plus($$$$)for me, Tax return !!!....it always worked for me back in late '60's.....prolly need ta be much more cautious now days tho, with all the Modern Tools they use now...... _____________ Brucer'

9/27/14, 8:18 PM	#6 Re: Racing and your income tax return?
Scooter23 Member Join Date: Feb 2009 Posts: 73	I was audited many years ago when was racing dirt sprints and had it all set up as a business. I feared the worst even though I had documented everything, since I had heard Big Brother didn't look kindly upon racing as a business. The only thing they got me on was trying to write off a motor at the end of the year. They said it had to be depreciated. As they say in business, 'PAPER THE FILE!'.