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anng27
Returning Member

Selling crafts while on disability

I had to stop working due to disability and collect SSDI. My spouse is the major breadwinner. I crochet and knit and sell those crafts online (and pre-covid, at craft fairs). In order to be sure I am not putting my disability payments in jeopardy, I applied for a state business license and report my income and expenses on our annual joint tax return as a business. I also fill out a WA state business return annually and remit my tiny sales tax revenue with it. Between business expenses like a PO Box (the cost even for the smallest box has gotten astronomical) and expanding my tool collection as my skills grow, I have never made a profit. Given periods of being unable to work consistently due to flares in my condition, I likely never will. Is there a more appropriate way to report my "sales" and "loses" than being a business? 

3 Replies
EricE_CPA
Employee Tax Expert

Selling crafts while on disability

If you are NOT making a profit from this business this will not impact your SSDI.

 

Any income whether is self-employed income OR misc income can impact your SSDI, dependent on the amount of income.

 

Here's a good article that helps in understanding how much of your earnings can impact your SSDI benefits

How much to earn to qualify for SSDI 

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anng27
Returning Member

Selling crafts while on disability

I know that my negative income (or even a small positive one) doesn't impact my SSDI. The question is, is there a more appropriate way to report my "sales" and "loses" to the IRS than as a business? If I'm small enough, can I let my state license lapse (though I'm not sure it ever does) and stop collecting sales tax, which I do so rarely and in such small amounts that it probably costs the state more to process my return than I pay back? I've read "When the IRS Classifies Your Business as a Hobby" and it does not answer these questions. 

Opus 17
Level 15

Selling crafts while on disability

As a hobby, you would report your gross income, without subtracting expenses, as "other taxable income".  There's a section for this in Turbotax. 

 

Some sources will say you can subtract the cost of materials before reporting the rest as income, but you can't subtract other expenses like tools, business use of your home, mileage to craft shows, booth rentals, and so on.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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