@anonymous5 wrote:
"no schedule C. hobby income (no expenses) is reported as misc income on schedule 1."
This would be my third year operating at a loss which is why I figured I would be required to file as a hobby this year and not claim any expenses. So it's okay to do so, it sounds like, until business picks up? At that point, then I just file a Schedule C again?
"The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year."
That phrase is geared toward making people file as a business and pay SE tax. The opposite is not necessarily true (that a business that only makes a profit 2 of the past 5 years is automatically a hobby). Lots of businesses lose money in 3 or more consecutive years and aren't downgraded to hobby.
I would look at the 9-factor test.
https://www.irs.gov/pub/irs-news/fs-07-18.pdf
https://www.irs.gov/newsroom/earning-side-income-is-it-a-hobby-or-a-business
If you are really running hard and just not. making it, why wouldn't it still be a business? But if you've taken a step back, aren't pushing as hard, etc., then maybe it's not a business any more.
https://turbotax.intuit.com/tax-tips/small-business-taxes/when-the-irs-classifies-your-business-as-a...
