From casual reading of the responses in the misc.taxes.moderated group. It appears that if a hobby generate income then it's a no brainer that expense can be deducted. I say it's worthwhile for him to do more detailed research on this topic. Depending on the potential payoff, it may be worthwhile to consult a local professional.

One thing *seems* certain. If this hobby/business keep showing a loss year after year then it will not pass the "smell" test. Yes, that's actually a term the IRS uses.

Everyone is assuming he is one of the amateur racers. I don't think he explicitly said that. Even amateurs need to buy auto parts and supplies, rent tools, get professional service, rent racetracks, etc. Organizing charitable events and fundraising can also be a legitimate business.

I have a question regarding Donations. I already looked up IRS.gov, and it didn't make much sense to me (forgive me, this is my second year itemizing).

I wanted to know a little about donations. (In goods - not cash donations).

I am single, no kids, and will be deducting- Property tax, Mtg Interest, + deductions from my recent refi this year. I have also donated and received the verification slips for around 3k (at their value, after depriciating any used goods wear/tear) in household, and purchased new donatated goods for Katrina, Salvation Army, and Non-profit Church Foster Home.

I wanted to know, how this works.

I may be total wrong here - forgive me;

But isn't it a few things (be it mtg interest+ other deductable interest+ goods) has to be > than standard exemption?

Or am I confused? I just want to make sure I donate enough to see the benefit on my taxes. I neither know the standard exemption for single, no kids - (live in MI), nor how the donations help me. I honestly (and I know you guys will rip me one for this - lol - just blindly hand the slips when I get my taxes done, and a spreadsheet of what I donated, condition, value new, value at donation *(depriciated for wear and tear). I don't know if I am getting any benefit out of this or not. I know of other people in need, that I could give the items to directly, but would not see the tax benefit out of, and I struggle with this every year. (like giving a stove to a friends low income family, verses donating to Salvation Army).

I recently had a friend approach me, and she wants to donations as well, but she is married, filling jointly, and I don't know how this works, to explain to her, she needs to have a value of X in donations + (whatever else) to be able to really benefit from the donations, verses the standard deduction. She owns a home, however, due to financial constraints let the house default to the bank. She made 7 payments this year, and her property taxes.

Can anyone explain how I can calculate this out, to know what I need to donate or have combined from all sources to be greater than the standard exemption?

Everyone's Q&A's can be found in that book. But it still isn't clear

I've got a question on CA state refund.

Two years ago I got a state refund check back and I ended paying state tax on that refund amount last year. And this year I probably gonna have to pay state tax again on last years state refund check. What gives? Why do we have to pay tax on a refund check since it was money the state borrowed from us and kept in bank earning interest for the entire year? This sucks.

rab75 said:A quick question - this being my first post my apologies if it is elementary. I am paid bi-weekly, and receive a paycheck on the 10th of each month which pays me wages for the trailing two weeks of the previous month. My question is whether my paycheck on 1/10/06, paying me for my earnings 12/15-12/31/05, will be included on my 2005 W-2. The relevance is that i have control over how much of my time I take as pay, and how much I take as vacation (future compensation). I need to stay under 150K on this year earnings for my wife and i to max out our roth IRA contribution, and I happen to be very close to the number right now. I tried looking in multiple places, but haven't found the answer. Anyone out there know how this goes? Thanks

just checked my tax textbook...you will have to pay tax for the last two weeks in december because you earn the money and there is no condition.

dcwilbur said:kost said:rab75 said:A quick question - this being my first post my apologies if it is elementary. I am paid bi-weekly, and receive a paycheck on the 10th of each month which pays me wages for the trailing two weeks of the previous month. My question is whether my paycheck on 1/10/06, paying me for my earnings 12/15-12/31/05, will be included on my 2005 W-2. The relevance is that i have control over how much of my time I take as pay, and how much I take as vacation (future compensation). I need to stay under 150K on this year earnings for my wife and i to max out our roth IRA contribution, and I happen to be very close to the number right now. I tried looking in multiple places, but haven't found the answer. Anyone out there know how this goes? Thanksjust checked my tax textbook...you will have to pay tax for the last two weeks in december because you earn the money and there is no condition.Wrong. For most individual taxpayers, the cash method is used. That is, income is reported in the year that it is actually or constructively received.

yup I called DHs HR this morning about this--they confirmed that our paycheck on 1/7/06 (for pay period ending 12/31) will be on 2006 W-2's NOT 2005. I now have to re-adjust my calculations as I didn't know this before--thanks for asking this question!

asdfzxcv1999 said:I've got a question on CA state refund.

Two years ago I got a state refund check back and I ended paying state tax on that refund amount last year. And this year I probably gonna have to pay state tax again on last years state refund check. What gives? Why do we have to pay tax on a refund check since it was money the state borrowed from us and kept in bank earning interest for the entire year? This sucks.

I can understand your paying federal tax on a state refund.. since you probably deducted that from your federal income.. but the situation you describe isnt clear unless they paid you some interest on your state refund and are taxing you on that...

asdfzxcv1999 said:I've got a question on CA state refund.

Two years ago I got a state refund check back and I ended paying state tax on that refund amount last year. And this year I probably gonna have to pay state tax again on last years state refund check. What gives? Why do we have to pay tax on a refund check since it was money the state borrowed from us and kept in bank earning interest for the entire year? This sucks.

You don't have to pay California income tax on the refund.
You should be entering any refund of state taxes shown on your federal return as a subtraction on California Schedule CA on the line labeled "Taxable refunds, credits, offsets of state and local income taxes."

If you failed to do this two years ago, you can still file an amended return. California allows you to go back up to 4 years. (I wouldn't bother, however, if it's only a dollar or two.) In addition, I would advise you to adjust your withholding at work so that you stop getting refunds and you'll never have this problem again.

If you are filing Form 540A , you can claim the adjustment for state tax refunds shown on your federal return directly on Form 540A in the section called "California Income Adjustments" on the line called "State income tax refund" (line 13a on the 2005 version of the form).

Doonie said:..dditionally, if we can take the mileage deduction (i keep track of how far the demo is from my house as we dont have an office), is there any other type of deduction we can take?

thanksYou have a lot of information that i don't think is pertinet to the issue at hand.

Yes, anyone can deduct "unreimbursed business expense" on their personal return. However, relating to mileage, the location your drive to can not be your regular office location. That is, IRS do not consider your regular daily commute an business expense.

Use the link I provided on the 1st page to search:

Group Google search on mileage

Also check IRS.gov more further information.