Hobby or a Business – The IRS is Watching You!
Did you know that if you earn income from your favorite hobby, you’re required to report it on your tax return? I didn’t think so. Most individuals aren’t aware of this and fail to report this income on their tax returns.
There are literally millions of American taxpayers that enjoy a hobby. Most of them, including myself, have only expenses connected with our hobbies. However, many others are able to generate a net profit.
As an example, let’s look at a coin collector. They may be fortunate and come across a rare coin they acquired at a very low cost. They sell the coin to another collector at a high price and this results in a net profit in their favorite pastime for the year.