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Posted on Jun 1, 2020

Borshoff Consulting, LLC

Is Your Business a Hobby or Is Your Hobby a Business?

We all have hobbies; hobbies like photography and knitting are usually just for fun, and we don’t anticipate making any money from doing them.

Did you know that you may be able to turn your hobby into a business and get generous tax breaks? Or, if you are doing a hobby that is not a business, did you know that the IRS requires that you declare your hobby income?

It’s true. You are required to report any income that you make from a hobby, and unfortunately, after 2018, the rules changed, and you can no longer deduct any hobby expenses. However, you can deduct business expenses if you are indeed running a business rather than having fun with a hobby.

So, how does it all work? Well, first, you need to determine whether your hobby is a hobby or a business. Then, if you find that you do have a hobby and not a business, you will need to report any hobby income you make. If you determine that you are running a legitimate business, you may get nice tax breaks!
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