In reality, if you don't have a profit motive and are not making a profit then the activity would be considered a hobby by the IRS, and your expenses and cost of goods sold would not normally be deductible under current tax law on your federal tax return. You should then report the income as hobby income and enter your expenses as a lump sum, as they may be deductible on your state income tax return.
You can enter hobby income in TurboTax by following these steps:
- Income and expenses
- Less common income
- Miscellaneous Income
- Hobby income and expenses
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