Renting a hobby shop falls into the gray area with regards to tax deductions, so let’s wade into that gray area in this article by Mouser Self Storage, serving South Fort Worth, Alvarado, and Johnson County. For the best in secure self storage, call us at 682-800-3949 for more information.
Now, let’s talk about a hobby shop and whether or not you can claim the rental of them on your Federal income tax filing.
Is the hobby shop strictly for a hobby?
If you do woodworking for a hobby, and you make items which are then given to friends and family, or kept around your property, as gifts, then what you are doing is partaking in a hobby. It does not matter whether you paint for a hobby, crochet, knit, sculpt, or make musical instruments out of driftwood, if you are simply doing it for your pleasure or for future gifts, your activities fall under the hobby category and, as such, have nothing to do with Federal taxes or deductions. We wish you well with your hobby, but let’s move on to the next scenario.
Or are you running a small business?
You step over into the gray area once your hobby transforms/morphs into a money-making enterprise. Let’s say you paint for a hobby, you rent a self storage unit for a quiet place to paint, outside of your home, and when you finish each painting, you advertise it on your Etsy page for sale.
Once you start accepting money for those paintings you are a business, and all business tax laws apply. Even if you don’t actually paint in the storage unit but, instead, you use the storage unit for an inventory storage unit, a small warehouse of sorts, it is still a business expense in the eyes of the Federal government and as such can be a deduction.
Again, the key to this discussion . . . payment for the items you produced in your hobby shop.
The devil is in the details.
Once you start accepting payment for your hobby productions/creations, you are legally a business. By law, you should have a business license and, most definitely, you must declare yourself as a business owner and list all expenses as well as monies made from that business.
Yes, we know, probably millions of people who have hobbies will sell items, on a small scale, without getting a business license or declaring taxes. We are not suggesting in any way, shape, or form, that you do that, but that is still the reality. All we can do is make you aware of the law; what you do with that knowledge is your “business.” To our way of thinking, renting a storage unit for $75 per month, for a year, means a tax deduction of $900, and that is a hefty deduction and hard to ignore.
A final word about Mouser Self Storage.
Hobby shop or shop for your business inventory, we have them at Mouser Self Storage, locally owned and operated, boasting the very best in secure storage. Call us and ask us about our car storage, our boat storage units, or our RV self storage, Ask us about the various storage spaces sizes, and ask us about our four levels of security. We have it all at Mouser at a price you can afford.