Sole Proprietor to Hobby for 2025

[julieandgeoff202]

Are these the correct steps to end my Sole Proprietor business and move forward as a hobby for my 2025 return?  Anything else I need to do?   Thanks.

To remove Schedule C

• Login to your TurboTax online account
• Click Take me to my return or pick up where I left off
• Click Tax Tools (located in the left side bar), then Click Tools
• Click Delete A Form in the Tools Center pop up box
• Click Delete next to the Schedule C in the Review Forms List Screen (you may have to scroll down)

To add Hobby Income

• While logged into your account
• Type the words Hobby Income, loss in the search box (located in the upper right hand corner)
• Click the Jump to Hobby Income, loss link that appears in the search results
• Continue with the onscreen instructions to add the hobby income

[MaxA1]

Yes, regarding the Sch C removal and No, for the Hobby income.  Consider the following steps in addition to the steps that you mentioned for removing the Sch C:

1. Go to the Wage & Income section in TurboTax
2. Select "Review" next to Self-employment income and expense
3. If you have one self-employment activity, click on "delete" to remove it.
   1. If you have multiple self-employed activities, click on the trash can icon for the activity you want to delete.

Depending on your Schedule C situation, whether it's rolling over from previous years or if you entered it for the first time this year and need to remove it, you may need to apply both steps.

Additionally, before removing your Self employment income activity, It is important to make sure that you indeed no longer qualify as a business per the IRS. The IRS does not allow any deductions for hobby income so it may cause more taxable income for you.  Generally, if your business does not show a profit for 1 of the last 5 years, the IRS may not consider the activity a business any more.  There are additional factors that come into play when making this determination.  The following links provide more info on the differences between a business and a hobby: 

• Here’s how to tell the difference between a hobby and a business for tax purposes
• Know the difference between a hobby and a business

Regarding entering hobby income.  If you received any tax forms for your Hobby income, such as a 1099-K, 1099-NEC, or 1099-MISC, navigate to the appropriate form in TurboTax and follow the questions to get your form entered on your return.  Here is a link that gives a step by step instruction on how to enter a 1099-MISC; Where do I enter a 1099-MISC?