- Our Team
January 10, 2023
Is your hobby a business? It matters to the IRS. The agency says your hobby is a business if it operates to make a profit. But it’s not a simple determination. To start with, intent matters.
Here are some factors the IRS offers to help you ascertain whether your hobby is a business:
If the activity you’re engaged in turns a profit, deductions are allowable for money spent for the production or collection of income or for the management, conservation or maintenance of property that brings you income. Deductions aren’t allowable if your activities aren’t turning a profit, including sports or things you do for recreation.
The IRS considers intent
The IRS uses no one factor to make the determination. A lot of the decision hinges on intent to derive profit. But here, too, it’s fuzzy because greater weight is given to objective facts than to your statement of intent, according to the IRS. Here are some scenarios to consider:
While intent is important in determining whether you’re running a business or enjoying a hobby, the IRS looks at the income derived from the activity. Your lack of a profit objective may seem to indicate you’re engaged in a hobby, but as you can see, many factors are considered in making this determination. The important takeaway here is to work closely with a tax professional.
September 5, 2023
In many companies, employees drive during the course of their jobs — to make deliveries, visit customers or pick up supplies. In some cases, they use their own cars, which can offer several business advantages, including that you don’t: Beware of Unexpected Situations The Insurance Information Institute notes that business owners often don’t realize the liability […]
September 5, 2023
Requested an Extension? Avoid Last-Minute Filing Did you request an extension to file your tax return after the standard April 18, 2023, deadline? If so, you now have until Oct. 16 to prepare and file it with the IRS. Don’t wait until the last minute! As soon as possible, gather your records for the 2022 tax year […]