Ask Jason, 3/9/12

Q: If I list 1099-K income hobby can I list equal expensives as I also buy for my hobby and spend more than I sell?

A: The answer is not as simple as it sounds. First, you can deduct “cost of goods sold” (COGS) directly from hobby income — if you have legitimate COGS and you can properly account for it. Any other expenses related to your hobby go on Schedule A as miscellaneous itemized deductions. Your deduction is limited to the amount of your hobby income, and can only be taken if the expenses exceed 2% of your income.

Q: Can an adjunct professor deduct mileage driven from a home office to class?

A: Maybe. The first thing to ask would be if you have a “home office” for tax purposes. Are you self-employed? If so, and if you really have a home office for tax purposes (meaning an area used regularly and EXCLUSIVELY for business), you could probably deduct the mileage. (But probably on Form 2106, not on your Schedule C.) Otherwise the answer would be no. But this question probably calls for a more-complete discussion in a full blog post. Look for one soon.

Q: What can a nonlicensed daycare deduct?

A: Any legitimate business expenses, same as a licensed daycare. The only hitch for nonlicensed daycares is the deduction for business use of your home. If you are not required to be licensed, then you can claim that deduction. If you ARE required to be licensed but are not licensed, then you CANNOT claim that deduction.

The answers provided in this segment are intended to be general in nature and do not constitute tax advice. Please pay a tax advisor to advise you about your unique situation before making any financial decisions.

Have a tax question? Click here to submit a question. Please note, I cannot personally provide a specific answer to your question by e-mail. (Ask Jason has been discontinued.)