Making money at home AND paying less tax. What could possibly be better? Well, not so fast. There are often some reporting requirements that you might not realize you have.
The good news is that once you’re in compliance with the law, you can get some huge tax write-offs.
Today we’re going to look at some of the most popular work-from-home tax saving schemes THAT WORK!
Yard Sales, eBay, Craigslist, Facebook Marketplace & More
Got some things laying around the house that somebody else might want? It’s never been easier to sell things online or even just through a basic garage or yard sale in the front yard.
You may have wondered about the taxes. In general, if you’re a casual seller, you have tax free sales. You’ve paid much more for the items than the used price you’re selling them for.
However, if you start to do this as a business and sell through swap meets, online or craft fairs, you will need to report your profit and losses. You will also likely be responsible for collecting and paying sales tax on your sales.
In the past, there was a clear line between rental investments and residences. You might have a primary residence and a second home. Those were your residences. And then you may have rental investments. In a few extreme cases, people may rent out their second home, but that was rare.
Airbnb has changed everything! Now people rent out rooms in their house, even their entire house for Airbnb. Sometimes they even use Airbnb to turn their long term rentals into short term vacation rentals. And they frequently turn that second home into an active vacation rental.
All of these options have tax consequences. There are many different options to rent out your primary residence,. You could rent out your house for a short period (14 or fewer days a year) and not pay any tax at all. Nor do you have to report it. Any more than that and you do have to report it, but it could be a business (short term rental) or a passive rental (long term rental). Your second home and passive rentals would have the similar questions. Are they a business or passive rentals?
Either way, you have to report the income. But, good news! You can also pick up a lot of tax deductions. That can be especially important if you found your mortgage interest and property tax deduction reduced thanks to the new Trump Tax Plan. You may be able to make up the difference through your rentals.
Maybe your summer vacation included visiting a casino and you won! Before you celebrate too much, remember the tax man is going to want his portion of the money.
You can take a deduction for gambling losses that are up to the amount of your gambling winnings, but these are reported as part of your itemized deductions. More people file with the standard deduction these days. If that’s you, then you can’t take the gambling losses.
If you have excess gambling losses (in excess of your winnings), you can’t claim a deduction for the excess losses.