Question about new tax laws and 1099's etc (Hobby or Business Income)

[Iguana829]

I received a 1099 from the both Paypal and Ebay this year. I am extremely confused how to file this correctly. I enjoy building computers so I often build one, sell it, then build another one. So on the 1099, it appears as if I received a pretty decent amount of "income" from this. Even though I would turn around and spend it immediately. How do I file this correctly? After looking at what the IRS defines as a business, this is definitely not a business whatsoever as I am not making money doing so. Any suggestions? There are some good ones here 

https://taxschool.illinois.edu/post/1099k/

But I have no idea what any of that means. Will the basic version of Turbotax work for this? I am not looking for itemized deductions but I don't want to get taxed on the full amount as it wasn't really income at all. I wouldn't have the capital to purchase the item without selling the previous item. If anything, I lost money on all the transactions. Any guidance would be appreciated. 

[ColeenD3]

If you do not have a profit motive, it might not be a business, but at best it is a hobby. Hobby income is still taxable income.

Yes, all income needs to be reported, even if it's from a hobby. Prior to tax year 2018, hobby-related expenses could be deducted, but this is no longer the case.

To enter hobby income and expenses in TurboTax please follow these steps:

• Sign in to your TurboTax account
• Click on Federal Taxes tab
• Choose Wages and Income
• Scroll down to Less Common Income and click Start to to right of Miscellaneous Income, 1099-A, 1099-C
• Click Start to right of Hobby income and expenses

[Iguana829]

So let's say I received 5000 in Paypal funds from said hobby as an example. I would get taxed on the full 5000? Even though I spent 5000 or more? The expenses for the hobby can't be deducted? That doesn't seem right. 

[JulieS]

Yes, the full $5000 would be taxable hobby income. 

Prior to 2018, you could deduct your hobby expense as Miscellaneous Deductions, but that entire category of deductions was eliminated with the Tax Cuts and Jobs Act. 

Your only option to deduct your expenses, would be to file a Schedule C and treat your hobby as a business. 

If you want to report it as a hobby, please follow Colleen D's instructions above.

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