I am filing on behalf of my daughter. She had a T-shirt business which showed a loss on the 2020 and 2021 1040s. 2022 will be the third year with no profit, so she is subject to the IRS declaring this as a hobby. In 2020 and 2021, she had W2 and/or 1099 income that made it advantageous to file. In 2022, she had no income, so technically she should not have to file. Should she file 2022 anyway, given the earlier tax benefit generated by the business? If the IRS were to declare the business as a hobby, what actions could I expect?
