Do You Have To Pay Taxes On Your Hobby?

Whether you picked up embroidering, dog grooming, or making jewelry, a side hobby may or may not require paying taxes.

Does your kids’ lemonade stand need to pay taxes? Probably not but if you’re doing something like selling cookies out of your kitchen, you might need to check out the rules.

Here are some things to consider when determining whether your activity is a hobby or business:

• Is your hobby carried out in a businesslike manner?
• Do you maintain complete and accurate books and records for your hobby?
• Is the effort you put into your hobby intended to make a profit?
• Do you depend on the income from your hobby for your livelihood?
• Do you know how to carry out your hobby as a successful business?
• Have you made a profit from your hobby?

If you receive income from your hobby with no intention of making a profit, you may have to report the income to the IRS.

This information is not a substitute for individualized tax advice. Please discuss your specific tax issues with a qualified tax professional.

Tip adapted from IRS⁷

Footnotes And Sources

7. ^{IRS.gov, March 18, 2024}