Hey guys,
I know that you are not tax professionals (unless some of you are), but as a starting point does anyone know:

If I made $4300 last year and I don't make any deductions can I report that as a hobby, or does it have to be reported as a business?

Disclaimer: I'm not an accountant.

http://www.irs.gov/irs/article/0,,id=186056,00.html has some great information for you. In general, it comes down to motives -- are you engaging this for a profit? If so, it's a business. Also, if you've shown a profit for your "hobby" in 3 out of the past 5 business years (including this year), it's a business. If you CAN'T show that, then they look at how you set things up (i.e. separate bank accounts, business journal, etc. constitutes a business).

My question to you is why you wouldn't want to report it as a business if you can. You can't take deductions for hobbies, but filing a Schedule C as a sole proprietor might make sense if you can take a few deductions.

Courtney, Kevin gave some great advice. The guy to ask is Steve Snyder ( http://www.thetaxmagician.com ). He is a certified tax advisor and an accountant. He is also a full time entertainer. He's happy to answer questions like these.

Problem is, I think his email listed on the website has changed. His new email is either:

thetaxmagician@comcast.net
or
thetaxmagician@centurylink.net

I believe you can sign up with HR block and fill everything out, and then find out. I remember only paying for the service to print out the forms last year.

H&R Block is not the place to go for your taxes. They are part time people that take a quick course that is set up to work with the wage makers. We don't work for a wage. The last time I went there I got a letter from IRS telling me that some of my deductions could not be used. Cost me an extra $400.

Wow tax questions for magicians. Don't do it. Please call a local accountant.

I have seen SO many guys with Paddy's story.

Calling a local accountant is great, BUT . . .with that in mind, I think that more magicians need to learn small business taxes themselves. There is a ton of record keeping, investment opportunities, and general knowledge that can be helpful when dealing with your accountant. By knowing the right questions, you save yourself both time and money. I agree that the Café probably isn't the best place to look for tax advice, especially when much of it can be found directly on the IRS website with a simple Google search.

Two great small business accounting books are Tax Savvy for Small Businesses (Frederick Daily) and Small Business Taxes Made Easy (Eva Rosenberg). Having a good accountant is a must --- I just prefer to also have a basic understanding of taxes for a sole proprietorship.

They need to lear a LOT of things about small business, but they DON'T need to learn them on a magic bullitan board.

I tell you when we started our business we made a TON of mistakes. One is we ended up using a small town personal accountant to do corporate taxes. OOPS. GET A PROFESSIONAL and pay for it now, or don't and pay for it later. If you pay later, it will cost you a LOT more.

I am a tax professional.

The hobby/business distinction is unrelated to how much money you earned. Without getting too technical the big question is "Was the activity engaged in for profit?" If you are doing magic full time and trying to earn a living then it is a business. If it's something you just do for fun, then it's probably a hobby. If there is some question, call a CPA.

The main reason for the hobby/business distinction is so that you cannot take a loss on your hobby to offset your other income. For example, if magic is your business and you made $100, but have $500 in expenses, then you can use the $400 loss to offset other income. If magic is your hobby, then you would only be able to take expenses equal to the amount of money that you earned from magic (ie-$100).