Tax Treatment of Hobbies

Taxpayers who earn money from their hobbies might have to report the income to the Internal Revenue Service (IRS). Here are some tips to help:

1. The IRS taxes income differently depending on whether it comes from a true hobby or a for-profit business.
2. 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 your hobby or business.
3. In some instances, you can deduct approvable expenses only up to the amount you brought in for income.

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

Tip adapted from IRS.gov¹⁰

Footnotes and Sources

10. ^{IRS.gov, May 8. 2024}