Boomers Retiring to “Fun” Businesses: Is birdwatching a business?
I guess I think it’s pretty cool that someone can retire and have a little “fun” business, like the ones described in a recent NYTimes article. One guy took some pictures of birds and got paid a little money. Another makes and sells mobiles, and third is a freelance writer.
served by picapp.com
Maybe I’m a little jealous, but these guys are obviously not worried about money. Must be nice. I’m also wondering if they file income taxes as sole proprietors and claim their losses. The “hobby loss” rules of the IRS require a small business to follow certain guidelines to avoid having the tax loss be denied.
Some of the factors the IRS considers:
- Is there an intent to make a profit?
- Does the owner depend on the business income?
- Are the losses beyond the control of the owner, during startup, for example?
- Is the owner taking steps to improve profitability?
- Does the activity make a profit in some years? (The IRS guideline is that the business should make a profit in 3 of the last 5 years).
- Is there an expectation of making a profit in the future?
The IRS also looks at the type of activity of the business. The freelance writer in the example has a better chance of getting his business accepted than does the guy who is taking photos of birds (writing and selling that writing is easier to justify as a real business than birdwatching and photography).
If you are considering starting a new business when you retire, check with your tax adviser to make sure your business losses will be able to be used to offset other income.
Tags: baby boomers, hobby loss, IRS, retirement, small businessRelated Stories
POSTED IN: Boomers nearing retirement, Businesses for Boomers
4 opinions for Boomers Retiring to “Fun” Businesses: Is birdwatching a business?
Is Your Home Business (Writing or Otherwise) Considered a “True” Business?
Jul 7, 2008 at 6:19 pm
[…] Jean Murray, at Small Business Boomers, has a great post with information about what the IRS (Internal Revenue Service in the US) considers a true business. You might like to check out her, Boomers Retiring to “Fun” Businesses: Is birdwatching a business? […]
Does the IRS Consider Your Quilting a Hobby or Business?
Jul 7, 2008 at 6:23 pm
[…] Jean Murray, at Small Business Boomers, has a great post with information about what the IRS (Internal Revenue Service in the US) considers a true business. You might like to check out her, Boomers Retiring to “Fun” Businesses: Is birdwatching a business? […]
Donna
Jul 8, 2008 at 12:35 am
Enjoyed your article, I think whenever people work from a home office they find it hard to be taken seriously. I remember in the past people ringing the doorbell for a coffee when I was in the middle of financial trading online, People looking puzzled when I said I worked 14 hour days. Writing online, it’s certainly hard to make people appreciate the sweat you put in. Recently my partner said “why don’t you go and play downstairs while I look at this vista problem with the software”.when I responded that I’m working on my laptop when downstairs not playing, he said it was just an expression. So I can see why the IRS has the same idea.
Don Simkovich
Jul 8, 2008 at 12:59 am
What a creative way to view a business. I guess a business is anything that meets some type of need. Certainly, bird watching could be expanded in to offering bird watching tours in certain areas.
Good to see the ingenuity at work.
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