If you do not have a dog *business* and declare expen$e$ on your taxe$, do you find it as difficult as me when you see how much it costs to go to a specialty recently? How many use pay pal for these bills?

If you sell one dog, the government wants it declared. You can also claim your expenses. Why would you not be legit and risk an audit? You probably dont charge sales tax and that is probably the law in your state also.

Why do you cop an attitude and think I am not *legit*? Why in the world would I need an *audit* for my hobby? What is wrong with people like you? I enjoy my *hobby*, spend my hard earned money doing it, and my dog is not a business.

Go Virginia!!!

I think you're right on Virgina. Some of us are normal, hobby breeders breeding a couple of litters a year.

Others are claiming every expense legit or not and charging sales tax on their many litters a month or year. They do that to offset their employee and handlers expenses. They are the breeders that are *All about the Benjamins* and not all about the breed.

It sounds like you're doing fine and there is no need for you to take heat from someone that is adept at warding off audits for their *business* .

It's only a business if there is an intent to make money. I have a farm that I claim w/ IRS, and I do TRY to make a profit w/ that, but it rarely happens anymore. If your accounting records consistently show no profit from your hobby, how could it be considered a business and subject to state sales taxes or be considered a deduction? A former IRS employee I spoke to told me they do not want to fool w/ people who never will make a profit. Why would they want to consistently see deductions? Who claims golfing or skiing as a business if it's just a hobby for 99.9% of the people? I'm set up in my state for a different type of business, and as I recall, there was a threshold income necessary before being required to register as a business. You can all do what you want, but I'd be talking to a CPA who knows the laws regarding the topic and is familiar w/ your situation. And yes, it sure can be an expensive hobby, but it is just that for most of us.

Why not just use a program like Quicken to keep track of your checkbook and set up categories for the dog expenses. QuickBooks also works well.

Ben,

In Ohio, you must have a vendor's license and declare & collect sales tax even if you sell one dog/puppy. It does not matter if you have many litters every month or sell just one dog/puppy.

"Some of us are normal, hobby breeders breeding a couple of litters a year." I am a small, "normal" hobby breeder who breeds a couple of litters a year but that does not put me above the law. You need to speak to either your county auditor's office, state tax department or your CPA to get the truth. States are looking at ways of earning revenue - sales tax on the sales of puppies/dogs is one venue.

My word of advice is, if your state does require the collection of sales tax, obtain your vendor's license and collect sales tax. If you Google "sales tax puppies", you will find blogs where anti-breeder/PETA/HSUS people enjoy turning in breeders anonymously to their state tax departments. You may never run an ad in a newspaper BUT many of us have websites as well as our names and addresses printed in show catalogs. Our information is out there so beware.

And Ben, I do not see how following the law makes me "All About the Benjamins".

No help on the tax question...but if I were to really, honestly keep track of what I spent on my dogs.....I would probably cry!! But that wouldn't stop me. I love my hobby!!

What makes it a hobby vs. not? Yes, some breeders breed 1-3 litters per year, some even fewer. Some also breed 10-15. Is 10-15 litters per year a hobby or a side business?

Obviously, each state has it's own laws and you're not the type of breeder I was discussing. I have 3 immediate family members that are CPA's that know these laws in my state and our neighboring states. They are all CPA's that are certified public accountants in 1 if not all 3 states. One is in auditing, the other 2 are in tax. All agree, I am not to charge sales tax on the few puppies I sell per year.

Sales tax is not required to be charged for a puppy in either state unless it is over ** amount of puppies per year. I would have to check with my CPA family members for that exact no. I don't sell enough puppies to warrant sales tax based on our state laws. Someone *in business* with many more puppies sold would.

I also look at what I or breeder friends of mine spend yearly and it's an expensive hobby. In my state, you have to be earning money to be able to deduct those expenses. I believe it's rounded over a 5 year plan.

Also realize, some breeders charge sales tax and it's never submitted to their state. They pocket it.

PETA/HSUS is frightening for all of us. This is why I don't list my puppies when available on my website. I keep a few photographs up and alternate them but never state when I have a litter available. My reasoning is also PETA.

Thank you for your advice but I'm covered by family members and my state laws. Others might benefit from your post.

Virginia,

Not coping an attitude here. In my state, as in others, the law is that sales tax is to be collected for all live animal sales. You are not above the law by having one litter per year. I dont know by your saying that its a hobby to you that you give your pups away for free. If you collect money for your pups, you should probally be charging sales tax and claiming what you charge on your taxes.

If you were to be audited, the government doesnt care if you feel like you are a hobby. They can look back 7 years and make you pay the sales tax for every puppy you never collected sales tax for plus penalty and interest.

I don't understand why you seem to think you know my situation and presume to lecture me on what I have to do in my state. You do not even know where I live, how many dogs I have, and what I do with them. So don't be lecturing me on things you have absolutely no knowledge about. Re-read what I posted Did I say I *sell* anything? Did I say that I ever have puppies? But here you go saying that I should *pro-bally* give them away for free? I was talking about how expensive it is to go to some specialties when you do not declare business deductions and expenses for a dog HOBBY. So, yes, it probably seems to me that you ARE copping an attitude. I think that coping with your aggressive attitude is disturbing.

I'm trying to figure out if these taxaholics are politicians(squeeze every tax penny from the average Joe)or illeagle aliens (pay for my health care and food stamps please)!! Either way, they take their tax collection seriously!

"illeagle aliens" - what are these - sick birds from outer space?

You thought you got a laugh, my 13 year old rolled when he saw my "spelling". Knew it didn't look right when I hit "post". Illegal alien wasn't my first thought to put down anyway, but you know, politically correct and all.

Virginia,

What is difficult to see about what you spend at a specialty? If you would be more clear so we can understand your question it would help. As far as paying by paypal for your expenses, why? I dont think people pay their handlers, hotel rooms and entry fees with paypal. Please be more clear with what exactly is difficult to see?

The federal government does not govern state tax regulations. Each state governs their own laws and rules regarding it.

That's where everyone is coming up with mixed answers, they live in different states and all have different situations. Some have boys never bred and have never had a bitch in whelp. So no pups are sold. Try to keep the difference in state laws in mind as well as different situations.

Difficult - as in so gosh darned expensive!!! Hotels, entries, everything associated with going to & staying at some of these specialty shows. Every time you turn around it seems that people are asking for more and money flies out of your pocket. A very expensive hobby, especially when you can't claim expenses and tax write offs!

Good question. I breed SO INFREQUENTLY. Is it so wrong to not take the few thousand I get back at puppy selling time and not declare it. It's basically only a recoup of the expenses I already shelled out. Certainly not a profit. I don't see the point of listing all my expenses of my hobby. If I collected stamps, and didn't sell them, would it be a hobby that I would write expenses off for? I just don't get it. It's an honest question. I see a hobby as something I choose to spend my cash on for my entertainment. If my hobby were going to see movies, would I write off the movie tickets?

I would love a serious response to would it really be beneficial to document all expenses and declare them on taxes. I choose dog shows as entertainment instead of restaurants, is it really a tax deduction if it's not a business?

It's a hobby if your expenses are greater than your income at the end of the year-- year in, year out. It's a business if you have financial gain at least 1x every few years AND you choose to keep proper records of all of that (incl mileage, etc). I keep records anyhow, just in case of an audit but again, I have another business so do for that anyhow.

Again-- questions? Talk to your CPA! That is who is going to go to bat for you should you ever be audited so chances are good you'll get good advice.

If you track your expenses on Quicken or whatever, you should KNOW what your status is. At 2 litters in a year, I am still not recouping all of my competition / training/ care expenses, but I bet if I had 3, I'd be in trouble w/ my CPA. Fortunately I have a real job that prevents me from breeding more than 2 litters in a year.

So a quick look on the net came up with IF you make a profit, you can offset the amount with your hobby expenses...so the benefit is that you won't have to pay tax on that money you earned.

But you cannot just write off your losses period.

So for the one off breeders with a litter every 2-4 years, like myself, I would rather just keep it all on the down low. I get paid in cash for the pups, I would rather not draw the IRS's attention (or anyone's in this un-dog friendly age with PETA) to my animals and hobby.

I think in regards to your specific question, I do not spend more than I can afford on specialties. I would love to travel but I don't. I go to my local one. I got to as many local shows and shows within 4 hrs from home. This is a hobby and if I have to stress myself out with large amounts of money and having to drive 8+ hours to get there, it's not that fun for me. If I had a better job with more time off, I would probably change my tune, but that's the stress-factor. I don't use Pay Pal for dog stuff other than sometimes buying things on line like supplements or toys. I like checks for entries. Checks for club dues and donations.

Just was audited .. have to pay back a huge amount of money. Auditor did not feel that showing my dogs helped my breeding business, that I was only doing it because I liked to do it. She talked to 3 other (non Lab) breeders who didn't show their dogs and decided that I did not need to ... even told me my kennel website was a personal not a business "thing" .. part of the problem was that my accountant was claiming things as deductions that the auditor did not feel pertained to the business .. and in some instances this was correct. I relied on my accountant with the university degree and accounting designation to determine what was eligible and what wasn't .. now I owe the government money back for the last three tax returns .. it sucks!

Keeping it simple...

If you qualify (and the tax code and legal precedent are voluminous on this, so I won't even begin to explain it) you can deduct expenses even over the amount of income reported. In other words, you can have a loss on your Schedule C (assuming you file a 1040).

If you are a hobby (i.e., do not qualify as a business) you can still deduct your expenses related to that hobby, but only to the extent of your hobby income. In other words, you cannot use a hobby to generate a loss, which can then be used to reduce your taxable income related to your REAL job.

So... if you do this as a hobby, and spend $10,000 showing, breeding, using a handler to finish a couple of dogs but you only sell a few puppies and that is your only income from this hobby (assume your total sales are $6,000) you can only deduct expenses totaling $6,000 making your hobby income $0.

I bill out at $175 an hour, so I'm not conducting a free clinic here... LOL!!!

To CPA : would you reply privately to me as I would like to discuss services and ideas since you have both dog and CPA background

I did talk with my CPA about this and we went over my numbers, and after careful consideration we decided to just let it be. In order for it to be worthwhile even to write off any expensese for me I would have to breed more than 4 litters a year. It averages out that I breed one about every 13-14 months so I would have to really ramp up production! I'm not in it for the money and see it as no different than the thousands of dollars I've spent on plants for landscaping over the years, it just enriches my life and it's something that I enjoy.But a business, No.

Virginia, I think PayPal is a great way to pay for dog show expenses. I am glad that Potomac is doing it for their seminars, trophies etc this year.I wish more clubs would look in to doing this