Can I report income from coaching as hobby income?

[lg2017]

I am retired, but coach a high school baseball team. I consider it a hobby since I don’t depend on the money and I would still do it without the money. The money I make is probably less than my actual expenses but I have not kept record of my expenses since I never considered it a “business”. Could I report this as hobby jncome or do I have to use Schedule C?

[Coleen3]

Probably not, unfortunately. You have to look at all the factors. The fact that you don't depend on the money counts in your favor but it is not the only test. If the High School pays you in Box 7 of 1099-Misc, then they consider you to be an Independent Contractor.

See all the factors below.

he Internal Revenue Service reminds taxpayers to follow appropriate guidelines when determining whether an activity is a business or a hobby, an activity not engaged in for profit.

In order to educate taxpayers regarding their filing obligations, this fact sheet, the eleventh in a series, explains the rules for determining if an activity qualifies as a business and what limitations apply if the activity is not a business. Incorrect deduction of hobby expenses account for a portion of the overstated adjustments, deductions, exemptions and credits that add up to $30 billion per year in unpaid taxes, according to IRS estimates.

In general, taxpayers may deduct ordinary and necessary expenses for conducting a trade or business. An ordinary expense is an expense that is common and accepted in the taxpayer’s trade or business. A necessary expense is one that is appropriate for the business. Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.

In order to make this determination, taxpayers should consider the following factors:

• Does the time and effort put into the activity indicate an intention to make a profit?
• Does the taxpayer depend on income from the activity?
• If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business?
• Has the taxpayer changed methods of operation to improve profitability?
• Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
• Has the taxpayer made a profit in similar activities in the past?
• Does the activity make a profit in some years?
• Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity

[lg2017]

If I filed it as hobby income last year, should I file an amendment?

[Coleen3]

Did you get a 1099 Box 7? If so, then yes.

[mdin]

Hello,

My daughter has a full time job but coached a sport for fun on the side in 2021  for a few months. Income is reported on a 1099 NEC. She has no expenses to claim related to coaching and has not coached this year.  Does this still have to be reported as self employed income?  

[AliciaP1]

No, unless she plans to continue this activity as a source of income.  Income reported on a 1099-NEC can be classified as a sporadic activity or a hobby.

To enter your 1099-NEC as hobby income in TurboTax Online please follow these steps:

1. Go to the Income & Expenses section of your tax return
2. Click Edit/Add for your form 1099-NEC
3. Input the details of your 1099-NEC and click Continue
4. Answer the questions and Continue until you get to the Does one of these uncommon situations apply? page
5. Choose This is not money earned as an employee or self-employed individual, it is from a sporadic activity or hobby (this is not common) and click Continue

@mdin

[mdin]

Thank you!

[ErnieS0]

Your daughter may have expenses @mdin, that would not be deductible were it a hobby.

She probably had deductible mileage to practices and games. She might have had expenses for supplies and materials such as books and videos.

You can also deduct the cost of snacks, drinks or an end of season party.

All these expenses will reduce her taxable income.

[improsiafan]

One thing is still unclear to me. If I enter hobby income from a 1099-NEC in the Other Common Income / Income from Form 1099-NEC area, and check the "this is hobby income (unusual)" checkbox, should I then also enter hobby income and/or expenses in the Less Common Income / Miscellaneous Income / Hobby income and expenses area? That would seem to be double-counting the income.

In that case, is it better to not enter the 1099-NEC income in the Other Common Income, and instead enter it under Less Common Income along with the hobby expenses there?