There is a spot on a 1040A tax return to write things off as a hobby. So if you are like me and like to build a brand new system or buy an old one to use an a minimum requirements machine then might as well pool all those purchases together with software and all and write it off as a hobby under the itemized expenses section. I would read up on that because the Department of Treasury loves people that write off their hobbies. The US government gets to see people doing things.

Be VERY careful on this.

You can write in whatever you want, but there are very strict rules on what can be exempted and what cannot. Just because you put in a number does not mean the IRS will accept it, nor does it mean it will survive the scrutiny of an audit.

If you do put in the exemption, but do it wrong and not qualify, you can face not just the (tiny) bit of tax you tried to evade, but also may face a hefty fine, may become ineligible to take several major tax deductions for a few years for filling a bad tax return, and potentially be charged with tax fraud --- a crime that can land you in jail.


Yes, there are ways to deduct the cost of certain items you purchase. But the loopholes generally require a tax expert to do correctly. General Electric, Bank of America, and several other major companies can get away with zero-dollar tax bills because they hire armies of lawyers to make sure the loopholes are followed exactly.

I'll second what frob said. If you want to take a deduction that you can classify as "creative" or "clever", have a tax accountant do it, or at least take a look at it.

The government doesn't like to see people engaging in their hobbies. It doesn't care (unless it considers those hobbies are "morally objectionable", in which case it tends to care a lot). The government loves seeing people do things like start new businesses or work to innovate things, or even expand formal qualifications for work. Those sorts of things they will generally be open to giving some kind of tax incentive to promote. Things like building model airplanes or forming Dungeons and Dragons clubs, not so much.

There is a spot on a 1040A tax return to write things off as a hobby. So if you are like me and like to build a brand new system or buy an old one to use an a minimum requirements machine then might as well pool all those purchases together with software and all and write it off as a hobby under the itemized expenses section. I would read up on that because the Department of Treasury loves people that write off their hobbies. The US government gets to see people doing things.

To write off an expense, you have to have a correlating income. So unless you are actually selling games and making money, and not through a business, then you aren't able to make the deduction as a "hobby". Also, you can only expense over 2% AGI.

Also, there are strict rules for deducting equipment like computers. Some deductions must be used SOLELY for business, some deductions can be prorated for the amount of business use, and some deductions must meet a minimum amount of use for business before they can be deducted (I believe computers must be minimum 50%).

Auditors love deductions like that so I'd do your homework before you start going crazy.

If you are an actual freelancer and file a 1099 instead of a 1040 its much easier to write off computer hardware as a business expense. Last year I wrote off all of my gaming computer as it was in fact my work computer as well. Wrote off part of my cell phone usage as it was in fact used for work. Trying to write stuff off as a "hobby" is just asking to get audited by the IRS. And I think you would have a very hard time trying to convince them that playing games constitutes a write off.

I would read up on that because the Department of Treasury loves people that write off their hobbies. The US government gets to see people doing things.

IANAL, and taking semi-anonymous tax advice from the Internet is always a bad idea.

There's two basic kinds of home businesses. Hobbies and businesses. If you have a business, income from that business is taxed a lot lower, and the government will let you write off your losses when you get your side business up and running. However, the government expects you to eventually make a profit and it might reclassify your business as a hobby. You'll lose your tax break and pay penalties.

If you declare your project a hobby, you get taxed higher, but you don't have to worry about the IRS coming back and demanding you repay them if it doesn't work out. However, they expect your hobby to look like a business. A great way to do this is to have a separate checking account for business expenses, and to file a DBA at your local city hall.

Neither of them cover your gaming hobby.

The best answer is if you've spent a significant amount of money on things you use for hobbies/work keep all your receipts and go to HR Block (or similar) at the end of the year and let them sort it out.