Hobby Income and Income Taxes
Do you have a hobby that is your passion which you have turned into a money-making venture? If so, you are not alone! In the past few years, many people have turned their hobbies into self-employment. If you have hobby income that you need to report on your tax return and are unsure how to do this, the information on this page should answer these questions for you.
Hobby Income
and Taxes
In the past few years, the gig economy has exploded and many folks have turned a hobby that was once just for fun into a business, including candle making, knitting, pottery making, dog sitting, and more. In 2023, the projected gross volume of the gig economy was expected to reach 455.2 billion in the U.S. alone. Find out if you are part of this as self-employed or an independent contractor.
Do I Need to File Taxes for a Hobby?
If you have income from a hobby, you will first need to determine if you need to report it on your tax return. To answer this, you can use our free FILEucator tool which will give you the answer. Once you have determined that you need to report the income, you will then need to determine if you are self-employed.
If you are self-employed and your hobby is for profit, you will need to report your income and expenses on Schedule C - eFileIT. You will also need pay self-employment taxes on your income.
Full tax calculator | Do I need to file? | Can I claim the EITC?
eFile will help you generate Schedule C and will calculate self-employment taxes via Schedule SE. The Tax App will also walk you through adding all your deductions so you pay as little taxes as possible - start free.
Here is how to report your hobby income on your return on eFile.com depending on which type it is:
- Your self-employment hobby income can be added under the Business section since you will be declaring yourself as a self-employed person. You can then proceed through this section to add all income and expenses. See detailed business instructions.
- Income that is not for self employment is reported on Schedule 1, line 8 (usually on Line Z, Other Income) which can be added in the Other Miscellaneous Income form in your eFile.com account.
Is My Hobby Income Taxable?
How to report cash income from your hobby on your tax return? Does my hobby income qualify as taxable? Do I pay taxes on Etsy or eBay sales? Refer to the table below.
Hobby is just for pleasure or as an activity to pass the time.
Yes
No
You spent your money on supplies to create a gift for a friend or relative and did not charge them for it.
Yes
No
You accept more than $600 for your product/service using online marketplaces or payment apps.
No
Yes
You made at least $400, whether it be through cash, credit/debit, Venmo or other payment app, or check.
No
Yes
You made a profit by purchasing supplies and creating a product or service provided to others for a price.
No
Yes
You created, built, crafted, or produced a product, such as an original piece of art or collector's item, and sold it on an online platform.
No
Yes
You collected, bought, or traded for a product or piece of equipment which you then sold for a profit.
No
Yes
If your hobby income produces profit, this is taxable income and it will need to be reported on your taxes. If you are still questioning if you need to file hobby income on your taxes, ask yourself these questions:
- Did you receive Form 1099-K from a payment app for your hobby product or service?
- Do you carry out the hobby in a businesslike manner and keep complete and accurate books and records?
- Does the time and effort you put into the hobby show that you want to make a profit? Does the hobby make a profit in some years? If so, how much profit?
- Do you expect to make a future profit from any asset used for the hobby that will increase in value in the future? Do you depend on income from the hobby for your livelihood?
- Are any losses due to circumstances beyond their control or are the losses normal for the startup phase of their type of business? Do they change how you operate your hobby to improve profits?
- Is there anyone else who you work with who knows how to carry on the hobby successfully?
If you answered yes to any of the above questions, you are generally required to file an income tax return showing this income.
You can generally earn up to $400 in hobby income without paying tax. Your hobby income may not be considered part of a business if you do not pursue aspects of business, such as advertising, billing, marketing, contracting, etc.
Related: What if I received a 1099-K?
Important: The IRS has delayed the new reporting thresholds for third-party settlement organizations previously set to take effect. Keep up with the timeline for these changes on the linked related page or see tax news and updates.
More information:
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