When it comes to filing your taxes, it seems there is another language that only…
Whether it’s something they’ve been doing for years or something they just started to make extra money, taxpayers must report income earned from hobbies in 2020 on next year’s tax return.
What the difference between a hobby and a business? A business operates to make a profit. People engage in a hobby for sport or recreation, not to make a profit.
Here are nine things taxpayers must consider when determining if an activity is a hobby or a business:
The IRS has many resources to help taxpayers report their income correctly. See the more information section below for additional guidance.
More Information:
Publication 17, Your Federal Income Tax
Publication 525, Taxable and Nontaxable Income
Publication 535, Business Expenses
Publication 334, Tax Guide for Small Business, For Individuals Who Use Schedule C
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