You must report all the income you received for sales and then possibly deduct the rent paid to the owner. This requires either a self employment return in order to reduce the income for the expenses from your income, or report it as a hobby without the ability to reduce the income by the expenses. You can review the information to make your decision as to whether it is a hobby or a business.
Any income received for services or goods is taxable. You have to decide if it's a hobby or a business for tax purposes. Review this page from IRS:
Key elements:
- A hobby requires you to report the income you received and under the current tax law, Tax Cuts and Jobs Act (TCJA), no expenses are allowed to be used to reduce the money collected even if you itemize deductions.
- A business allows you to deduct the costs necessary to obtain the income. The law explains that 'you must be engaged in the activity to produce a profit'. The test under IRS is that you must show a profit three out of every five consecutive year.
To enter hobby income and expenses in TurboTax please follow these steps:
- Once in your tax return, click on Federal Taxes tab
- Choose Wages and Income
- Scroll down to Less Common Income and click Start to to right of Miscellaneous Income, 1099-A, 1099-C
- Click Start to right of Hobby income and expenses
[Edited: 03/10/2022 | 7:53a PST] @lilfoot62
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