Tax Tip 8/6/14: HOBBY INCOME AND EXPENSE Millions of people enjoy hobbies that are also a source of income. Some examples include stamp and coin collecting, craft making, horsemanship, and auto racing. You must report on your tax return the income you earn from a hobby. How you report the income and expenses depend on whether the activity is a hobby or a business. It is a business if you do it to make a profit. It is a hobby if you are mostly in it for the recreation or sport of it. How you conduct your business, the time and effort you put in and if your livelihood is dependent on whether you make a profit are just some of the key factors to consider. Generally, you can only deduct your hobby expenses up to the amount of hobby income but they must be common and appropriate expenses for that type of business. If your expenses are more than your income, then you have a loss and you can’t deduct the loss from your other income. Expenses for hobbies are deducted on Schedule A, itemized deductions.
Posted on: Wed, 06 Aug 2014 17:44:41 +0000
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