HelenC12
Expert Alumni

Get your taxes done using TurboTax

From the information above, it sounds like you have a hobby. Even if you don't receive cash, just products, you have to declare the fair market value of the item as income. Per IRS, all income needs to be reported, even if it's from a hobby.

 

The IRS has nine things you must consider when determining if an activity is a hobby or a business:

 

  • Whether the activity is carried out in a businesslike manner and the taxpayer maintains complete and accurate books and records.
     
  • Whether the time and effort the taxpayer puts into the activity show they intend to make it profitable.
     
  • Whether they depend on income from the activity for their livelihood.
     
  • Whether any losses are due to circumstances beyond the taxpayer's control or are normal for the startup phase of their type of business.
     
  • Whether they change methods of operation to improve profitability.
     
  • Whether the taxpayer and their advisors have the knowledge needed to carry out the activity as a successful business.
     
  • Whether the taxpayer was successful in making a profit in similar activities in the past.
     
  • Whether the activity makes a profit in some years and how much profit it makes.
     
  • Whether the taxpayers can expect to make a future profit from the appreciation of the assets used in the activity.

As of 2018, you can no longer deduct hobby expenses from your federal taxes. However, some states pull in hobby expenses from your federal return to deduct them at the state level.

 

To enter Hobby Income (and expenses) as other reportable income:

  1. Sign into your TurboTax account.
  2. Select Pick up where you left off or Continue your return.
  3. Select Federal from the left side menu.
  4. Type other reportable income in the search bar and click on the Jump to other reportable income.
  5. On the Other Wages Received screen, select No at Did you receive any other wages? 
  6. If the “Jump to” feature doesn’t work, on the Wages and income screen, scroll down to Add more income. If you don’t see this, scroll down to Less Common Income and select Show more and scroll down to Miscellaneous Income, 1099-A, 1099-C then Start/Revisit.
  7. On the Let’s Work on Any Miscellaneous Income screen, scroll down to Hobby income and expensesStart or Revisit.
  8. Continue with the onscreen interview until complete.
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