Hobby or Business?

Many people have hobbies. Some do it for fun, while others do it for a profit.

Income from a hobby must be included in your
income. Before 2018, the expenses associated with the hobby could be deducted as an itemized deduction. With the Tax Cuts and Jobs Act, hobby expenses are no longer deductible. Sorry.

"Ok," you say, "now what?"

Consider making your hobby a business. The IRS looks at the hobby with a list of factors to
determine if indeed the hobby is for profit or not. Some factors include the amount of time,
making a profit and expertise of the individual. A photographer may be a professional by day,
but during graduation season, afternoons and weekends are full of photoshoots. Software and
equipment can get expensive, but they are legitimate business expenses and are deductible.


Popular Posts