NewsTax Tips For Hobbyists

Tax Tips For Hobbyists

If you’re an avid hobbyist, know that you might be able to deduct some of the costs related to your hobby.

Do you collect stamps in your spare time? Are you crazy about action figures or comic books? If you’re an avid hobbyist, know that you might be able to deduct some of the costs related to your hobby.
The Internal Revenue Service has released a few guidelines on what qualifies as a legitimate deduction. First, know that you are required to report the income you earn from a hobby. Rules vary for reporting income and expenses based on whether the activity is a hobby or a business.

The IRS has these tips about hobbies:

Generally, you can deduct ordinary and necessary hobby expenses. The IRS defines an ordinary expense as common and accepted for the activity. A necessary expense is appropriate for the activity.

Be aware that you can only deduct expenses related to a hobby up to the amount of hobby income. If your expenses exceed your hobby income, this is a loss from the activity. The IRS says hobbyists cannot deduct the loss from other income.

There are different rules for income reporting requirements depending on whether your hobby is a business or an activity you engage in just for fun.

You are required to itemize deductions on your tax return to qualify for a deduction. Expenses generally fall into three types of deductions, and there are special rules for each type.

For more on this topic, see IRS Publication 535, Business Expenses.

RELATED CONTENT: This Black Mother Built A Side Hustle By Flipping Mobile Homes

Source: Black Enterprise

New App ‘The Bump’ Promises To Be Every Parent’s Village In A Digital Age

Many consider parenting a sacred calling, requiring careful attention and dedication. Yet, there is no manual. Every child is different, varying in size, health, intelligence,...

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Latest

Newsletter

Don't miss