Hobby income is treated in a special (but not very tax advantageous) manner. Hobby income is not subject to self-employment tax like other income reported on schedule C. You will report the gross income on line 21 of your form 1040 return, and the expenses are reported in a lump sum amount as a miscellaneous itemized deduction. The unfortunate part is that hobby expenses are limited to the gross amount of income reported on line 21 of form 1040.
You can report hobby income and hobby expenses as follows:
- Go to the Federal Income category.
- Go to the Wages and Income Subcategory.
- Find the section labeled Less Common Income.
- Click start on the line labeled Miscellaneous Income, 1099-A, 1099-C.
- On the following screen, click start on the line labeled Hobby income and expenses.
- The next screen will give you one line for the income reported on the 1099-MISC and one line for the sum of all your hobby expenses.
