Quote:
Originally Posted by ss3011
Thanks Julie, for where the income goes, but how do you offset the winnings with your expenses. Thanks
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If you are claiming the racing activity as a business ALL income and expenses go on Schedule C, even if you are claiming a loss. If you have income you are subject to SE tax.
If you are treating it as a hobby, the income goes on line 21, Form 1040. The expenses are deducted on Schedule A as a miscellaneous deduction. The expenses are limited to the activity's gross income. In addition, the expenses are subject to the 2%-of-AGI limitation. A taxpayer engaged in a not-for-profit activity (hobby) is not subject to SE tax on income from that activity.