Paying tax on stringing

Discussion in 'Stringing Techniques / Stringing Machines' started by domosborn, Oct 27, 2012.

  1. domosborn

    domosborn Rookie

    Joined:
    Mar 1, 2010
    Messages:
    200
    So just out of interest do you guys pay tax on the money you make stringing? I havent started making money yet and I was wondering whether if i do start whether ill have to pay tax...
     
    #1
  2. Ramon

    Ramon Hall of Fame

    Joined:
    Sep 4, 2011
    Messages:
    3,576
    Location:
    Florida
    If you follow the letter of the law, you technically have to pay income tax on any money you earn whether it is a business or a hobby. Of course, you can also deduct expenses to the extent of earnings if it's a business. If it's a hobby, deductions are a little tougher because they are itemized deductions with a 2% AGI threshold, so if you don't have enough other deductions, you'll take a standard deduction instead and still pay tax on the all the earnings.

    I really don't know how many people report earnings from stringing if it's a small amount. How many waiters do you think report all of their tips? The tax law says you have to pay tax on interest from a bank account even if it's so low that the bank didn't even bother to send you a statement. The tax law also says that if you barter (ex. you string your neighbor's racquet, and in exchange, he washes your car) you both have to pay tax on the fair market value of the services you provided to each other. In all these cases you are violating the law if you do not report them as taxable events.
     
    Last edited: Oct 27, 2012
    #2
  3. mikeler

    mikeler G.O.A.T.

    Joined:
    Sep 26, 2008
    Messages:
    19,809
    Location:
    Central Florida
    And many states say you have to pay sales tax on Internet purchases. :)
     
    #3
  4. shissncg

    shissncg Rookie

    Joined:
    Mar 24, 2004
    Messages:
    137
    Location:
    Durham, NC
    Yep. I was a registered business in CT (not specifically for stringing) and always declared any income from stringing and paid appropriate taxes. Doing so allows you to take appropriate deductions. Also, nobody want to get audited :)
     
    #4
  5. seekay

    seekay Semi-Pro

    Joined:
    Dec 9, 2011
    Messages:
    486
    Location:
    Champaign, IL
    I registered with the state a few months ago so I'd be able to deduct my new stringing machine as a business expense. And I figured it would be good to make things official before I started advertising (which is another way of saying nobody wants to get audited).

    I'm not sure about other states, but Illinois requires that I collect sales tax on "general merchandise." Since that doesn't include labor, it's not a big deal, but I have to send in a small payment every quarter for 8.75% of all the strings and overgrips I sell.
     
    #5
  6. domosborn

    domosborn Rookie

    Joined:
    Mar 1, 2010
    Messages:
    200
    okie doke, thanks for the info guys, anybody who is UK based have any ideas also? I doubt i'll be making enough to hit the threshold right? right?!!
     
    #6
  7. jjaded

    jjaded New User

    Joined:
    Oct 15, 2012
    Messages:
    23
    If you're really concerned about getting audited the stringing machine should likely be treated as a capital, not a current expense.

    P.S. I realize this a ridiculous first post and an equally ridiculous point.
     
    #7
  8. seekay

    seekay Semi-Pro

    Joined:
    Dec 9, 2011
    Messages:
    486
    Location:
    Champaign, IL
    Thanks, that's good info. I'm going to let a professional do my taxes this year to try and make sure I get all those nuances right.

    And welcome to the board!
     
    #8
  9. usta2050

    usta2050 Rookie

    Joined:
    Dec 28, 2010
    Messages:
    373
    as long as you don't give out receipts and it's hard to prove, IRS won't come after u. it's not worth their time and efforts.

    like most people, they want to get promoted and earn more so they want to focus on the big offenders.
     
    #9

Share This Page