You may have to first determine if this is a hobby or a business.
The IRS expects that if you start a business, you intend to make money at it. If you don't, your business is likely to be a hobby, in which case you can only claim expenses to the extent of your hobby income. To determine if your business is a hobby, the IRS looks at numerous factors, including the following:
· Do you put in the necessary time and effort to turn a profit?
· Have you made a profit in this activity in the past, or can you expect to make one in the future?
· Do you have the necessary knowledge to succeed in this field?
· Do you depend on income from this activity?
· Are your losses beyond your control?
.The IRS generalizes with this statement (referred to as the "3 of 5 rule"):
"The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year."
Here is the link to the IRS distinctions between the two:
https://www.irs.gov/uac/business-or-hobby-answer-has-implications-for-deductions
As a Business, you are considered to be self-employed. You report both income (if any) and expenses on Schedule C/Business Income & Expenses.
TurboTax will guide you step by step through the process.
· Type in "business expenses" in the search box in the right-hand corner of your screen
· Click jump to business expenses
You may report hobby income and expenses equal to (but not more than) the hobby income.
To find this section in TurboTax, open your return, then go to My Account >> Tools >> Topic Search. Type in "hobby income, loss", then click the topic in the list and GO to go directly to the start of this section. Follow the prompts to enter your hobby income and expenses.
If you have any other details regarding this question, please feel free to post them in the comment section.
