Tax question on accounting for winnings

72 views on this topic and not one reply? Guess not that many people on here are getting those 1099s? Actually not familiar with that program but looked at last years stuff my acct did and its under winnings……taxed same as lottery or other taxable income.

The issue here is more of how to manipulate Turbo Tax, than proper tax treatment. A little background—if you receive a 1099 Misc, then TTax assumes this to be income produced in a business, and wants to take you to a Schedule C, which if you get 1099s each year, is not a bad answer, as you have more flexibility in taking deductions. With “hobby income”, which is reported on the face of Form 1040, you are severly limited in the expenses that can be deducted against the income,and are excluded entirely from certain deductions. For the record, depreciation IS NOT an allowed deduction against hobby income, so you will need to find other allowed expenses that you can prove with documentation to offset the hobby income. And remember, hobby losses are not deductible. If you want to go the hobby route, just tell Turbo Tax “No” when it asked for the 1099 information, and then report the income as if you did not receive the 1099, remebering that all income should be reported. I know this is complicated, and sounds like bunch of double speak, so if I can help, drop me an email to [url=mailto:mdwhitten@comcast.net]mdwhitten@comcast.net[/url], and Ill be glad to try and help with some specifics. Best regards, Mike Whitten

Richard, The problem with treating the income as hobby income is that you MUST deduct the expense on Schedule A, as miscellaneous expenses, which are cannot exceed the amount of the income earned, and which, by the way schedule A works, must be more than 7.5% of adjusted gross income before they reduce the first dollar of income. This means that if you have $100,000 of adjusted gross income, your deductible fishing expenses, which you must be able to prove, have to exceed $7,500 in order to do you any good as far as reducing income taxes. It is a tricky scenario, and one that most folks do not follow. Again, you have my email, if you want to discuss further. Im glad always to try and help a fellow “Family” member. Mike Whitten

Hey……….If you can get Obama to assign you as an adviser or cabinet member then you dont have to pay any type of taxes!

I am glad to see someone discussing all of this here. I have heard so many permutations of how to manage hobby income my head spins. My conclusion looking at the reg under hobby income is that it was worthless particularly when you dont win anything like me! Plus since it falls under the 7.5 or 2.5 adjustment rule there aint no way in hades Ill ever make enough in tournaments to touch it anyway. I dont know how so many folks “write off” their fishing expenses. It just doesnt look legal to me or even worth it. Had a friend win 50K this year and that would be the only way I could see it being worth your whileC.O.D. Jr. III