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Do you have a hobby or a business? The IRS will want to know…

[1]From collecting stamps and woodworking to crafting and quilting, people have all kinds of hobbies – and most of these hobbies will never turn a profit. For hobbies that do earn income, people should know that they must report it on their tax return. They should also be mindful that their hobby might be a business.

Determining whether they should classify the activity as a hobby or a business can be confusing, but the bottom line is that a business operates to make a profit. There are a few other things people should consider when determining if their project is a hobby or business [2]. No single consideration is the deciding factor, but taxpayers should review all of them when determining whether their activities are a business.

Here are the things taxpayers should evaluate to decide whether they have a hobby or a business:

If you’d like help determining if your hobby has become a business for IRS tax reporting purposes, please contact a ShindelRock tax professional [3].