Stock Photography - Hobby Income or Business?

[David_R7]

I am interested in selling photos online through stock photography agencies. To me this is just a hobby and I anticipate the income to be low and not something I would ever depend on. I already have a full-time career.

Would I claim income from stock photography as hobby income on my taxes, since that is what it is to me? Or would the IRS declare this to be a business in spite of how I see it and operate? At least one agency I know of sends contributors with earnings a 1099-MISC every year.

Given that a business usually requires the payment of regular income taxes plus self-employment taxes, I want to be sure I don't later have a problem because I didn't file correctly and pay everything required.

[Katie-P]

Hi @David_R7!

Thanks for participating in our Ask the Experts Event today! I'm happy to help you.

You are spot on with your questions about hobby income vs. self-employment income. The determination can be confusing. I'm highlighting a few points below:

• The IRS says here that the bottom line is whether the business operates to make a profit. If you are in it to make money, it's not a hobby.
• If it's hobby income, you just pay income taxes on the INCOME. You can't take any deductions against that income. Reference this article.
• If it's self-employment income, you pay income taxes on the NET INCOME and self-employment taxes on the NET INCOME as well. 
• Here are more articles that may help you with this determination:
  • When the IRS Classifies Your Business as a Hobby
  • Tips for taxpayers who make money from a hobby 
  • Hobby or business: here's what to know about that side hustle 

I hope this information is helpful! I'll stay tuned in case you have any follow-up questions. Thank you again @David_R7!