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1. Hobby Income Reporting:

   • Taxpayers who make money from a hobby must report that income on their tax return. Unlike a business, where the primary goal is to make a profit, hobbies are pursued for recreation or enjoyment.
   • If you engage in a hobby that generates income, you’ll need to include that income on your tax return. Report it on Line 8 (Other income) of Schedule 1 of Form 104012.

2. Business vs. Hobby Determination:

   • To determine whether your activity is a business or a hobby, consider these factors:
     • Profit Motive: Businesses operate to make a profit, while hobbies are for recreation.
     • Facts and Circumstances: Base your determination on all relevant facts and circumstances.
   • If your activity doesn’t aim to make a profit, the expenses associated with it become miscellaneous itemized deductions and can no longer be deducted. However, you still need to report the income on your tax return1.

3. Sole Proprietorship (Business Income):

   • If your hobby generates substantial income and you’re the sole proprietor (i.e., the only owner of a...2.

Remember to consult the relevant IRS publications (such as Publication 334, Publication 525, and Pub...