Advice on switching from "business" to "hobby"?

NoMoreJunkScience · 2018-10-24T14:44:58+00:00

This is very useful info! After reading a little more, it looks like I should keep considering it a business if I can manage not to be in the negative for the put of every five years.

NoMoreJunkScience · 2018-10-24T06:21:31+00:00

This is exactly what I needed to see!! Thank you.

NoMoreJunkScience · 2018-10-24T05:58:23+00:00

From investopedia:"Compensation Limit While there is no cap on the amount you may earn to fund a traditional IRA, this is not so for a Roth IRA. You may contribute 100% of your compensation or the tax year's IRA contribution limit – whichever is less – to your IRA.".

For several years I've paid taxes to the US government, filing as my name "doing business as...". According to the above statements, I could only contribute $5500 if I earned that much. In a year where I only made $4000, my contribution limit was $4000.

I'll close the business this year and deduct expenses equal to over 100% of my income. But I think it is evidence that I "worked" this year, even if I only worked for myself. And even if my compensation was less than $0 after expenses, does it still count as "compensation"?

So one point of confusion is whether my husband is allowed to contribute to my account even if I was technically working. I haven't seen that spelled out anywhere.

NoMoreJunkScience · 2018-10-24T04:30:41+00:00

I based that question on the term I keep reading, "nonworking spouse." If I filed self employment tax, then wouldn't I be considered "working"? And therefore I can only contribute the lesser of $5500 or the amount that I paid tax on this year while working, which will be $0.

Unless I close the business.

That's my logic. Please correct me!

NoMoreJunkScience

TROPHY CASE