Author Topic: Dog boarding via Rover.com, tax question  (Read 484 times)

Anniemaygo

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Dog boarding via Rover.com, tax question
« on: September 30, 2017, 10:14:28 AM »
Hi everyone,

I am looking for some tax advice regarding side hustle. 

About 4 months ago, I created an account on Rover.com for dog boarding in my house.  I am not doing much, but this is one option for income after FIRE, so I wanted to try it and build a little clientele and positive reviews.

This year, I expect to earn about $1000.  I have not requested any payouts yet so cash I have earned is just sitting in the account and I can request payment via check or PayPal. 
So far, I have not incurred any expenses.  I do offer dog transportation and track my mileage.  The dogs have the run of my house and when I am out they stay in a spare room with a baby gate. 

Currently making about $250k a year in my day job, mortgage paid off, do my own taxes with turbo tax.  Would it be worth the money to set this up as a business and have someone do my taxes with deductions for use of my house / car / etc for the business?  I know nothing about this and appreciate any resources you can suggest.

Thanks!
« Last Edit: September 30, 2017, 10:17:23 AM by Anniemaygo »

secondcor521

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Re: Dog boarding via Rover.com, tax question
« Reply #1 on: September 30, 2017, 10:58:00 AM »
My ex used to have a small home-based business in our house, so I read up on all the rules.  I am an amateur at this, but I do pretty well I think.  My information is a bit dated (~10 years old) so things may have changed somewhat since then.

If you want additional deductions, and if you don't mind some record keeping, and if you can do the taxes yourself or find someone inexpensive to do them, and if the dog room with a baby gate is used exclusively for your business and it's a noticeable percentage of your overall home's square footage, then I would say yes, it would be worth it.

A couple of other things:

Based on your description, you're already running a business and should treat it that way for tax purposes.  You'll need to fill out Schedules C (for the business) and SE (for self employment taxes).  You'll be able to deduct any expenses for the business, including pro-rata costs for utilities, mortgage interest, and depreciation on the dogs' room, as well as mileage, dog materials (food, treats?), and anything else you buy for the business.

At least when I did it, depreciation on the part of your home used for the business had two things about it to pay attention to:  (1) Any depreciation you take on the house is recaptured at a 25% rate when you sell the home, and (2) Rule 1 applies even if you don't take the depreciation in the years you are eligible to.  So what we did was take the depreciation and pay taxes on it when we sold our home.  So depreciation as far as I can tell works to defer taxes for a while.

In my state, you can do a DBA in your own name without doing anything.  So if your name is Steve Smith and you are running Steve Smith Dog Services, you're good to go.  Check with the Secretary of State in your state to find out what the rules are where you live; they can differ from state to state.

You will have to report the $1000 in income even though you haven't requested a payout.

As far as resources go, I just read through the IRS instructions on it.  I've always thought that they're reasonably understandable if you read through them carefully a few times.  Since you're used to TurboTax, what you might do is read through the IRS instructions and try to do your business taxes on your own the first year, then pay a CPA or whoever to review your taxes and confirm that you've done them correctly or clarify any questions you have.  That's a lot cheaper than paying the CPA to do all of the work, and you gain knowledge which will help you fill out your taxes from then on.

Good luck!
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