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Old 05-21-2012, 04:59 PM   #9
Julie Jordan
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Join Date: Dec 2001
Location: Modesto, CA
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Default Re: Help: Self Employ. Tax on Race Purses

Quote:
Originally Posted by ss3011 View Post
Thanks Julie, for where the income goes, but how do you offset the winnings with your expenses. Thanks
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.
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