Laura_CPA
Employee Tax Expert

Self employed

Hi Oldradio99,

 

I hope you are having a good day ðŸ™‚! I understand your concern here, happy to help. If you purchased all these parts with the intent to not make a profit, then this is treated as a hobby. Unfortunately, under the new Tax Reform, hobby expenses cannot be used to offset hobby income, so you'll have to report your income on Schedule I, Line 8 of your 1040 and this income will not be subject to self-employment tax. 

 

However, if you got into this with the intent to make a profit, then you'll be considered a sole proprietor and the net profit (after expenses, if any), could be subject to self-employment tax. As far as the expenses are concerned, you can make an educated estimate of what was spent in those years you purchased these items. You may search the items purchased online and get history price information to help you, please make sure you keep a log on how you came up with the estimated amounts. 

 

Please let us know if you have any further questions. 

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