Many people do side hobbies for fun, which also happen to bring in extra income. Whenever taxpayers make money from their hobbies, they must report the income to the IRS. Here are some tips to help you correctly claim your income and expenses:
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• Discern between a hobby or business: You can use this IRS checklist to help guide you to identify which type of income you have.
• Deduct expenses: Your hobby probably has necessary expenses that you must spend in order to do it well. For example, you may need to buy yarn to knit scarves. You can deduct any expenses that fall within these categories.
• Follow deduction limits: You can only deduct approvable expenses, up to the amount you brought in for income.
Other details may apply, and you can find more information on the IRS website.
* 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.gov[7]
[7] www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses
