Contractor tax situtaion from skydiving

[kawisixer01 0]

Everyone at my home DZ has a federal employer ID and works for the DZ as a contractor. I have never taken payment from the DZ, preferring to save it all up and purchase gear, courses, and services off the account. I am curious if I could conceivably deduct all the mileage to the dropzone, rigs and video equipment, etc from my overall income for the year? Kinda curious to survey other drop zone workers how you guys handle your taxes?

[DougH 270]

Your DZO would be in the wrong if they aren't issuing you a 1099 because you spend enough to zero out your account.

Money earned by an independent contractor gets reported on a 1099.

Money taken off account for jumps etc are expenses of said contractor and are reported as business expenses on the independent contractors Schedule C or business entity filing if not operating as a sole proprietor.

You could deduct the items that you mentioned. That is where a decent accountant with small business tax experience comes in to play.

If you don't make enough income from jumping to offset the expenses you mentioned, in other words you think you are going to lower your overall AGI from skydiving expenses, then think again. In that case you have a hobby, not a business, and there are hobby loss rules.

"The restraining order says you're only allowed to touch me in freefall"
=P

[chedlin 0]

My understanding would also be that mileage to and from would never be deductible unless it was to someplace other than your home DZ.

I am not an accountant or lawyer, so their advice should be considered.

[DiverMike 5]

The IRS basic rule is commuting from home to any place of business is not deductible. The only mileage that would conceivably be deductible is if you drove from home to a dropzone in the morning, then drove to a second dropzone. The mileage to that second dropzone would be deductible, but the mileage from that second dropzone home would not be.

If you have a FEIN, and it is associated with a Sub-S corporation you created, the DZ does not have to file a 1099. (you are probably not doing this - you would be filing an 1120S to notify the IRS of income and expense).

For the same reason I jump off a perfectly good diving board.

[DougH 270]

Registering an S corp and filing a 1120S for him is going to be a lot of work, without a lot of benefit in my experience.

Liability wise he is still the individual doing work jumps, so it doesn't shield you from liability. They sue the S-corp and they sue you the jumper.

It can save some on self employment taxes, transferring some wages into s-corp earnings and distributions. But depending on your state rules on registering a corporation to do business, you may find that the minimum annual or biannual state fee outstrips the employment tax savings.

"The restraining order says you're only allowed to touch me in freefall"
=P

[sammielu 3]

Definitely talk with an accountant. My understanding is that training (jumps & equipment) to get a new job (using a USPA rating) is not tax deductible, however after you have that rating, additional training or equipment (coach jumps, additional gear, travel to go train somewhere other than your workplace) to retain or improve that original rating (USPA coach or jumpmaster) is deductible.