My total expenses last year were over $2,000. Photoshop and Office (buy.com, cheapest out there) were large components of that, and hosting was nearly half of that. Also consider the Cedar Point season pass I gave away, office expenses, T-shirts, etc. And that doesn't even count the books and computer hardware (which I couldn't really deduct since I use them for other things).
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Jeff
Webmaster/Admin - CoasterBuzz.com