Earning income on the side: Is it a hobby or a business?
Whether it’s something you’ve been doing for years or
something you just started to make extra money, you must report
income earned from hobbies.
What the difference between a hobby and a business? A business operates to make a profit. People engage in a hobby for sport or recreation, not to make a profit. Here are nine things you must consider when determining if an activity is a hobby or a business:
| IRS Resources Publication 17, Your Federal Income Tax Publication 525, Taxable and Nontaxable Income Publication 535, Business Expenses Publication 334, Tax Guide for Small Business, For Individuals Who Use Schedule C |