I'm concerned about the new tax laws and wondering if I should continue to sell my Art online. My hobby income has more than doubled this year so far to be around $8000, but it has cost me $2500 in materials. It doesn't seem fair to have to pay taxes on the entire $8000 but rather $5500. My main form of payment is PayPal through a Facebook shop so I'm thinking I will receive a 1099-k, any advice on how to proceed?
This sounds more like you have a business and not a hobby. For a business you can subtract your expenses from your income so you will only be taxed on the net income. However, you will also have to pay Self-Employment taxes which cover both the employer and employee portions for Social Security and Medicare taxes. Then one-half of your SE taxes are entered on the tax return as an adjustment to income, lowering your Adjusted Gross Income.
Business income and expenses are reported on Schedule C which is part of and included with your federal tax return, Form 1040.
Go to this IRS website for the difference between a hobby and a business - https://www.irs.gov/newsroom/heres-how-to-tell-the-difference-between-a-hobby-and-a-business-for-tax...
No it's definitely a hobby. I'm battling a disease and I use the art to try to keep my fine motor skills working and relax me. I doubt I can even keep it up for much longer and that's why I'm not sure how to handle the taxes for 2022.
Regardless of the new tax code for 2022 you were and are still required to report hobby income on your federal tax return as ordinary income and cannot claim any hobby expenses as a deduction, whether or not you receive a Form 1099-K.
The removal of hobby expenses as a deduction on the federal return were due to the tax code changes in effect for tax years 2018 thru 2025.
Payment processors are required to issue a Form 1099-K for all payments of $600 or more starting in tax year 2022.