Lilrain

I think I would get another accountants opinion. this just doesn't sound right to me. I am fairly certain you cannont use any materials you bought and used in personal quilts or to give away as a deduction. My quilting friends who have businesses related to quilting have to declare how much was used for personal vs business. i also thinbk you can only deduct the mileage directly related to business expenditures
Be Careful you do not need IRS problems

bigbrownowl

And I thought UK tax law was complicated! I run a business from home, and as long as you have receipts, and can justify the expense against your business, then you can. Mind you, I have a great accountant who manages to find me savings every year.

I think I will stay right here in the UK - no moving to the States for me!

seamstome

I am not an accountant just somebody who has been in business for 30 years and been through paper and live audits. No way is that going to fly.

justflyingin

According to the rather scary posts here, yes, they probably wouldn't do well as a self-employed person.

Don't worry about it. If you are keeping tabs, keeping receipts, and doing your taxes legally, do not stay up all night worrying. Some people are better off if they aren't self-employed as they don't have the personality for it.

I also wondered why so many objected to this. People who are self-employed do get to take off some of their expenses, but of course, not everything.

If it came about to be a problem that you aren't making money after 3 years, just don't declare some of your expenses for a couple of years so it looks like you made a profit-- if only $10 to keep the qualifications as a business.

It sounds like your MIL knows what she is doing. And she knows your situation better than any of us. I'd let her be my guide.

mimicrystal

I see nothing wrong with what you have done. We had a business out of our home for about 5 yrs. I sold purses and a few other misc things on EBAY...It was totally legal, we had a tax ID, we kept a log on the pc of everything we sold and bought and I even deducted the mileage to and from the stores I went to. I never got audited. But I'm not concerned if I do b/c of the accurate log and receipts of EVERYTHING....I don't think you have anything to worry about...I"m sure your MIL knows what she is doing. I agree " I think some people misunderstood you"...Good luck with your quilts...

windycitygal

I personally have my own business making bags and quilts. I file state taxes qaurterly, and pay federal on the schedule C. I have only taken a small deduction for bussiness cards and internet usage. My accountant said that things that I had before the business started like the rulers ect were not deductions! I have reciepts for everything I buy to keep track of my spending and my income. My suggestion is to have someone else do your taxes-for the few dollars you are writing off you could end up in a costly audit.

bigsister63

Per IRS- an area for a home business must be used "exclusively " for that business. This means that you are not to use this area for any other use than is related to the business. EG. accessing computer to check personal emails. (such as table in kitchen used for crafting for profit may not be used to eat on or kids do home work) Your comments brings up this issue as to the use of the area for making quilts for selling AND personal use. I would be checking with another tax professional to see if you can deduct the room as a expense. Better to be safe than audited. Also IRS says that ALL income must be reported including $ for ebay, craft shows, garage sales, tips ets. Do people do this?????? Unfortunally our current tax code make it to easy to fudge numbers.

DebbE

I'd also be careful what I put on this message board -- the IRS can access this board, too! Not being paranoid, but I stay well clear of any questionable deductions, as I've seen what the IRS does to folks.

NanaCsews2

I think you don't need to defend yourself. IMHO. I have explained this over and over to my son why I won't start a business sewing/quilting since I cannot get hired (too little jobs, too much competition here in our area). Very little profit and under appreciated. Many years ago I did a home daycare. I put my income on our taxes (I was not licensed) but I did not deduct one thing for supplies, food, electrical/heating-nothing. I knew 30 years ago when I 'babysat' that no way was I going to get involved in explaining anything to anyone why I felt I should/could be compensated for my space and money I spent on caring for other people's children (which I loved doing but there was very little money to raise a family). I made sure the amount I charged covered my expenses. Same thing this family member is doing. Even though he is entitled to deduct certain expenses. We suggested he get a highly reputable tax accountant to do his taxes. Trust is a huge thing. Sometimes you can't win an argument you didn't start. I hope you have a wonderful day and can forget all about this.