August 18, 2016
Tax Tip: Rules for Home Office Deductions

Making Money with Your Hobby

In this article we are going to discuss the topic of “Making Money with Your Hobby”. Most Americans have hobbies that they enjoy, but some use hobbies to generate extra income.  For example, eBaying, coin collecting, stamp collecting, antiquing, and many other pursuits can often rake in additional cash to cover expenses. The IRS requires you to report all income on your taxes, however the rules on deductions and income depend on whether it’s a hobby or a business. Here’s what the IRS says: Making Money with Your Hobby The easiest way to determine whether your hobby is a business or not, is to think about whether you treat it as a way to make a profit and whether you depend on the income. Consult a qualified tax professional if you have questions. You can generally deduct accepted expenses for your hobby, such as the cost of stamps or supplies. However, you can only deduct expenses up to the limit of the income earned by the hobby. For information on how to itemize your hobby deductions, consult a tax expert or read Publication 535, “Business Expenses,” on IRS.gov. Tip courtesy of IRS.gov