Taxpayers who earn money from their hobbies might have to report the income to the IRS. Here are some tips to help:
- The IRS taxes income differently, depending on whether the income stems from a true hobby or a for-profit business.
- Your hobby may entail expenses required to do it well. For example, you may need to buy yarn to knit scarves. You might be able to deduct expenses associated with hobby/business.
- In some instances, you can deduct approvable expenses only up to the amount you brought in for income.
* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.
Tip adapted from IRS.gov6
- IRS.gov, May 25, 2021