What is tax deductible?
by Unsung Zero · in General Discussion · 12/02/2005 (9:30 am) · 5 replies
What could be considered tax deductible for a small starting up game dev company residing in the U.S.?
Would attending an IGC event, which is business related fall under expenses to write off?
Could Torque boot camp be written off? Having the company reimburse me for such business expenses every April would make it much more affordable.
I read a few days ago a post (I can't seem to find it for the life of me) the poster had licensed and tried several gaming engines, as they were tax deductible. This is what initially got me questioning what we could write off.
To those who are part of a game dev company, what have you been able to deduct?
I ask, not to get something for nothing, but to get a better understanding of what a company could legally be entitled to write off. I'm sure there are others out there who have the same questions, but haven't asked them yet.
I am aware of the different types of companies that can be formed and their varying benefits and costs. I know I can ask a lawyer and get more sound information, but I would still ask up on the forums to see what others have done.
Thanks for any information shared.
Would attending an IGC event, which is business related fall under expenses to write off?
Could Torque boot camp be written off? Having the company reimburse me for such business expenses every April would make it much more affordable.
I read a few days ago a post (I can't seem to find it for the life of me) the poster had licensed and tried several gaming engines, as they were tax deductible. This is what initially got me questioning what we could write off.
To those who are part of a game dev company, what have you been able to deduct?
I ask, not to get something for nothing, but to get a better understanding of what a company could legally be entitled to write off. I'm sure there are others out there who have the same questions, but haven't asked them yet.
I am aware of the different types of companies that can be formed and their varying benefits and costs. I know I can ask a lawyer and get more sound information, but I would still ask up on the forums to see what others have done.
Thanks for any information shared.
#2
I am not an accountant.
That being said, I plan to deduct mine. I will be using TurboTax Premier to file my return because it walks you through all of that and will help you find almost all the deductions you qualify for. It has definitely paid for itself and more with my returns the past couple of years.
12/02/2005 (10:36 am)
It depends on your exact circumstances and it would be best to ask your accountant or tax preparer. A good place to start looking for more info would be with the Schedule C instructions from the IRS.I am not an accountant.
That being said, I plan to deduct mine. I will be using TurboTax Premier to file my return because it walks you through all of that and will help you find almost all the deductions you qualify for. It has definitely paid for itself and more with my returns the past couple of years.
#3
12/03/2005 (10:18 am)
Thanks Tom, I checked out Schedule C, it is helpful. 
#4
Best way to prove it is an occupation is that you keep accurate records of any profit/losses, you are actually in the business for a profit (hard to show to the IRS some times) and that you don't commingle your own household finances with your game dev business finances.
Having a separately formed, legal entity as a company, with separate bank accounts, etc. would be a big plus, but you still have to show the IRS that you are in business for making money, not just playing games :)
12/03/2005 (10:35 am)
The biggest thing to remember is that the IRS will look to determine if game dev is a hobby or an occupation. If they determine it's a hobby, they will disallow any deductions.Best way to prove it is an occupation is that you keep accurate records of any profit/losses, you are actually in the business for a profit (hard to show to the IRS some times) and that you don't commingle your own household finances with your game dev business finances.
Having a separately formed, legal entity as a company, with separate bank accounts, etc. would be a big plus, but you still have to show the IRS that you are in business for making money, not just playing games :)
#5
01/03/2006 (1:16 pm)
Just about any reasonable expense that you incur for your business is deductible. If you are running your company from your home morgage/rent is deductible to a capped percentage. However, beware that the IRS will take interest if you have not filed to create a business. Also this is not something that you would file on your personal tax form, although there are some deductibles for work related expenses that cannot be reimbursed from the company (like tolls) that can be taken on your personal tax forms. In the beginning it is easier to suck up the cost rather than waste time filing tax forms for a company that is not selling anything yet. 
Torque 3D Owner Michael Cozzolino
Big Monk Games