@Anonymous wrote:
but there is an important preamble to the 9 tests
No one factor is determinative in making this determination. In addition, it is not intended that only the factors described in this paragraph are to be taken into account in making the determination, or that a determination is to be made on the basis that the number of factors (whether or not listed in this paragraph) indicating a lack of profit objective exceeds the number of factors indicating a profit objective, or vice versa.
certainly, if the grandmother were to property report losses year after year, the IRS would classify it as a hobby. but if it's profitable, they would hit her with SE tax.
And of course, if she is paid more then the ordinary and necessary expenses that a babysitter has, the difference is profit. If she is simply reimbursed for her expenses and not more then the expenses cancel the income so there would be no income to report.
**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**
