Need to know how to file hobby taxes on breeding cats? You need to file hobby taxes on your cat breeding if you have made any income from it the previous year. Hobby taxes are a necessity, and you can even deduct expenses without opening up a business. In order to do this you will need to first decide whether breeding cats is just a hobby or a legitimate business. The Internal Revenue Service provides a test for determining whether you are engaging in a hobby or business. The thing to remember with hobby taxes is that you may not claim losses. There may be an advantage to setting up a legitimate business for your cat breeding instead so you can calculate those losses. What you ultimately do is up to you, but here is how to file hobby taxes on breeding cats.
In order to file hobby taxes on breeding cats, you will need:
- All of your tax information
- All receipts related to your hobby of breeding cats
A 1040 tax form
- Add up your hobby taxes that are related to breeding cats. Think about food, vet bills, medications, toys, travel, entry fees for shows, entertainment and anything else that is in some way related to your hobby of breeding cats.
Add up all of your cat breeding income. Include winnings from shows, sales of cats and any other income you can think of. Include everything!
- On your 1040, add your income to line 21. This line is for income that was not necessarily engaged in for profit. All hobbies that produce income end up on this line here.
- On your 1040, schedule A, add your expenses to the miscellaneous expense column. Keep in mind that you cannot claim more than your income produced from line 21. If you have made $2,000, but had $2,500 in expenses, you may only claim $2,000 in expenses. In this case, it may be better to open a legitimate business for your cat breeding, so you can claim all of your losses.