Hobby expenses are deductible up Hobby Income. They can not create a loss.
Generally, the IRS classifies your business as a hobby, it won't allow you to take any losses. However, in certain limited situations you can use your hobby expenses to reduce your taxes.
If you have a hobby loss expense that you could otherwise claim as a personal expense, such as the home mortgage deduction, you can claim those expenses in full. Other expenses, such as advertising, wages, insurance premiums, depreciation or amortization, may also be usable. However, you must have earned more total income in your hobby than the amount of all of these deductions, including your personal deductions. In that scenario, it's likely the IRS would categorize your hobby as a business anyway.
Hobby expenses are deductible only as a Miscellaneous Itemized Deduction on IRS Schedule A. This means that Hobby expenses could be deducted only by taxpayers who itemized their personal deductions. Moreover, hobby expenses were deductible only if, and to the extent, they exceeded 2% of the hobbyist’s adjusted gross income (total income minus business expenses and a few other expenses). And, such expenses were deductible only up to the amount of hobby income--if you had no income from a hobby, you got no deduction.
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Hobby
