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US Income tax question

by krish997
5 replies
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Hi Guys,

I have an income tax question. I have started spending money on building websites (have someone else build it for me) and haven't made more than $15 on ad sense for 2013.

My question is - can I report this income using Sch C on Form 1040 (US)? I will most likely have a loss (as I spent more on building the sites, understandable as this is first year).

My concern is what if IRS considers this as 'hobby' instead of real deal? I do not spend time building (since I am restricted on my visa) but I do make all the decisions and make someone else work for me - any thoughts? Please help.
#income #question #tax
  • Profile picture of the author Green Moon
    The IRS does limit hobby losses, but it is not automatic. See Hobby Losses - Is Your Business a For-Profit Activity? | Tax Help Advisor

    If you intend that building websites is going to be a profit-making endeavor, I would treat it as such from the beginning, including reporting all income and expenses on your Schedule C.
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  • Profile picture of the author Kingfish85
    Originally Posted by krish997 View Post

    Hi Guys,

    I have an income tax question. I have started spending money on building websites (have someone else build it for me) and haven't made more than $15 on ad sense for 2013.

    My question is - can I report this income using Sch C on Form 1040 (US)? I will most likely have a loss (as I spent more on building the sites, understandable as this is first year).

    My concern is what if IRS considers this as 'hobby' instead of real deal? I do not spend time building (since I am restricted on my visa) but I do make all the decisions and make someone else work for me - any thoughts? Please help.
    I would suggest you speak with an accountant about this.
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  • Profile picture of the author DSGDSG
    Read this understanding I am not an accountant and I only am saying what I know from talking with my own accountant. I may even have gotten all the info messed up. Are you set up as a business? You can show losses for either three or five years, I forget which, until the IRS classifies what you're doing as a hobby rather than a legit business.
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  • Profile picture of the author Meharis
    Originally Posted by krish997 View Post

    Hi Guys,

    I have an income tax question. I have started spending money on building websites (have someone else build it for me) and haven't made more than $15 on ad sense for 2013.

    My question is - can I report this income using Sch C on Form 1040 (US)? I will most likely have a loss (as I spent more on building the sites, understandable as this is first year).

    My concern is what if IRS considers this as 'hobby' instead of real deal? I do not spend time building (since I am restricted on my visa) but I do make all the decisions and make someone else work for me - any thoughts? Please help.

    krish997,

    Here's what I personally would do.

    Take note from everyone's suggestions.
    Find a local accountant and see what's
    best for you according to your plans.

    Do it right from the start and you'll
    never regret it.

    Meharis
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