Tax Tips for Hobbies

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Many people think that income earned from a hobby does not need to be reported on your tax return. Here are four tax tips you should know about hobbies:

1. Determine if your hobby is a hobby or business. IRS publication 535 sets forth nine factors to help you determine whether your activity is a hobby or a business.

2. Hobby deductions. You can usually deduct ordinary and necessary hobby expenses as long as it is necessary and common for the activity.

3. Limits on hobby expenses. Generally you can only deduct your hobby expenses up to the amount of your hobby income. You cannot deduct a loss from your other income.

4. How to deduct hobby expenses. You must itemize deductions on your tax return in order to deduct your hobby expenses.

To contact our office, call 816-524-4949 or visit our website at www.Hoorfarlaw.com.

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