Tax Warrior Chronicles

Did Your Hobby Became More Expensive Under TCJA?

Posted on Mon, Jan 28, 2019

By: Dylan Haughey, CPA and Rosalind W. Sutch, CPA, MT

 

Hobbies are a great way to occupy your free time.  If you’re lucky, you may earn a few bucks in the process and if you’re even luckier, you may earn enough to offset some or all the costs of your hobby.  The IRS has strict rules about what is a hobby and what is a business and those rules matter now more than ever. 

 

Before the Tax Cuts and Jobs Act (“TCJA”) you could deduct hobby expenses you incurred pursing your hobby up to the amount of earnings as a miscellaneous itemized deduction if your total miscellaneous itemized deductions exceeded 2% of your adjusted gross income (“AGI”).  Now, things have changed.

 

What’s the difference

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New Simplified Safe Harbor Tax Deduction Option for Home Office Users

Posted on Tue, Jan 14, 2014

Last January, The Tax Warriors® alerted our readers to a new home office deduction option offered by the IRS.  The basic idea of this new option is if you are someone who struggles with accounting for every receipt and expenditure, and thus may have holes in your overall home-office expense recordkeeping; the new “safe harbor” option may be an easier option for you.

 

The IRS  revised Publication 587 (Business Use of Your Home) for use in preparing 2013 returns. The revised publication clarifies important aspects of the new optional safe harbor method of computing deductions for business use of a home, including a new, comprehensive and simplified deduction worksheet (See page 29 of

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IRS Issues Long-Awaited Final Tangible Property Regulations

Posted on Mon, Sep 30, 2013

The IRS has issued long-awaited final regulations providing guidance on amounts paid to acquire, produce, or improve tangible property in its September 19th Federal Register. The finalized regulations modify and supersede the temporary regulations that were in effect since December 2011. This is the fourth time the IRS has issued these so-called “repair regulations” but the first time they have been in final form.

The regulations are more than 200 pages long! In today’s post, we will discuss two of the specific provisions that you may find helpful in the year-end tax planning for your business.

 

The De Minimis Safe Harbor Has Been Simplified

Prior to the final regulations, you were

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IRS Makes Home Office Deduction Simpler - New Safeharbor Option

Posted on Mon, Jan 21, 2013

 

If you have a home office, the IRS has recently come out with some very good news in Rev Proc 2031-13: a simpler method for calculating the Office-In-Home deduction will be available for your 2013 tax return.  In place of the 43-line Form 8829 that was previously required to take the home office deduction, the new optional safe-harbor method allows a $5 deduction for every square foot of home office space, up to 300 square feet (a $1,500 deduction cap).  Gone will be the days of sorting through old utility and insurance bills and then allocating the annual expenses between your Schedule C, Schedule A, Form 8829, and nondeductible portions (calculations that even da Vinci would admire).

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