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Can the Cost of Playing Sports be Deducted?

By Shanta on August 26, 2014 in Federal Resources, Tax Advice
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With the start of a new school year comes the cost of fall team sports.  From my experience, I find it pretty expensive to play team sports these days.  Do you have kids that participate in sports through a nonprofit program in school or the community?  The fees, equipment, jerseys, sneakers, skates and travel, can cost as much as their education.   You would think there would be a tax break in all of these expenses, right? Something? Anything?

Sadly, no. Most expenses associated with after school and extracurricular sports are not tax deductible – even if the programs are affiliated with school or non profits. That includes what you spend on instruction, equipment, accessories and uniforms.

But I did say “most” expenses – not all. There are a few exceptions to this rule.

The most obvious – and least common – exception is that expenses related to sports can be deductible if your child is engaged in the activity for profit. That changes the nature of the expense from a personal expense to a business expense.  If your child wins prize money or equivalent for participating in sports competitions, you can offset taxable income from those prizes by deducting the associated costs. How much you can claim as a deduction – and where to report the income and deductions – depends on whether you treat the sport as a business or a hobby;  since most of us aren’t raising a little Serena Williams, it’s likely a hobby which means you’ll report winnings as “other income”, and take the deduction as a miscellaneous expense.

The more popular exception to the rule is child care. While instructional fees are generally not deductible, if the activity is taking the place of other child care, it may be. The cost of sending your child to an after school program may be a qualifying child care expense, even if it focuses on a particular sport. To qualify, care must have been provided for a qualifying person – that generally means your dependent child age 12 or younger when the care was provided.

There’s one more potential tax break. One of the things that they don’t tell you when you sign your kid up for sports is that you’re really signing up for yourself.   Inevitably, you’ll end up being a team parent or coach. While the value of your time spent volunteering is never deductible, out of pocket expenses relating to volunteering for qualifying charitable organizations are deductible. To qualify, those expenses must be unreimbursed; directly connected with the services; expenses you had only because of the services you gave.

Some examples of out of pocket expenses relating to providing services for a charitable organization include:

1. The cost of transportation. You can either deduct the actual costs of gas and maintenance related to your travel so that you can perform services or you can claim the standard mileage rate.  No matter which method you use (mileage or actual), you can still deduct parking fees and tolls.

2. Travel expenses. You can also claim travel expenses while you are away from home, assuming that the expenses are related to the volunteer services and not for personal use – you can’t write off a trip to Europe to “coach” rugby just because you always wanted to go to Paris. Travel expenses include air, rail, and bus transportation (as well as expenses for your car); taxi fares or other costs of transportation between the airport or station and your hotel; the cost of lodging and the cost of meals.

3. Uniforms and related accessories. While you can’t deduct the cost of uniforms for your kids, if you buy uniforms or equipment as part of your charitable services, you can deduct those costs. Be aware, however, that to qualify as an expense, the uniforms or equipment must be worn only while volunteering and are otherwise not suitable for everyday use.

 

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ShantaView all posts by Shanta