Hello - my husband and I are both NYC-based performing artists, though not full-time - "rent jobs" are necessary. Both of our rent jobs are hourly and non-full-time, but are W-2 with all taxes withheld. Our performing contracts, as we get them, are 1099. We've filed married status since FY
2004. 2004 was a loss year for both of us, 2005 was profit for him and loss for me, 2006 will have been a loss year for both. My last year that I filed as a single, 2003, was a profit year, as was 2002 (really small profit, but profit). I am not sure what my husband's loss/profit status for arts work was in 2002/03. Since we've been married, my husband has done our taxes on Turbo Tax, but prior to that I was with a Manhattan-based CPA specializing in taxes for artists and he always said you could not claim more than 3 years in a row of losses without reorganization unless you want to invite an audit. So my questions are:- is this true? Do any accountants out there disagree?
- if so, does our marital status, or year we first filed jointly, impact the start of the 3 years?
- also, if necessary, how does one reorganize? (Neither of us is incorporated)
- I presume we can always choose to not claim certain things to appearas though we turned a profit?
- If necessary, can we simply not file for self-employed arts business one year if it will have been a loss? Also, if we turn a profit the following year, can we begin filing again for the self-employed arts business?
My husband says that he has asked accountants about this and that as long as our documentation is sound, we prove adequately that we have worked in the field for the required amount of hours per year, and we are conservative in what we claim as expenses, there is no need to worry about how many years in a row we take a loss. I am paranoid, however, and really want to be certain we won't have an audit. When we do get contracts, they tend to be out of state, so our taxes can get quite complicated. Many thanks.