Tax Tip: Do You Have to Pay Taxes on Your Hobby?

Whether you picked up embroidering, dog grooming, or making your jewelry, a side hobby may or may not require paying taxes. 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 have the knowledge needed 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 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.gov7

Footnotes and Sources

  1., June 30, 2021