The IRS and your hobby
#31
Senior Member
Join Date: Nov 2011
Location: Any place I can sew
Posts: 434
I don't know if any one has seen the artical on MSN money about selling your hobbies. Hobbies provide a great way to relax from the daily grind for many people and it is also offer a way to make extra spending money. Be aware that when your hobby produces income you owe tax on it. A good friend of mine who was making and selling from her home and now she has to pay lots of money to the IRS.
#32
Just a recommendation, IMHO, if you are worried about your hobby/business. Spend the $$ to purchase the H & R Block Premium & Business software (they even include State if your state collects income tax). They clearly walk you through the whole process and even included tutorials if you need them on different aspects of deductions, including self employment. I have been using their software for years; have learned so much and feel very confident when I click the button to send my report to the IRS.
PS: and keep your receipt of the H&R software because you get to take that cost as a deductions.
PS: and keep your receipt of the H&R software because you get to take that cost as a deductions.
#33
Junior Member
Join Date: Jan 2012
Location: Central Virginia
Posts: 202
I am so glad we send our taxes to a great tax preparer. He has done them every year since moving to VA from WV because we still have property in WV. Also, b/c I have always had some kind of in home business plus doing direct sells. (first Tupperware for years, now Stampin' Up!) But everyone is correct. Keep every receipt even if not sure - it is better to have some he can't use than wish you had them. But a big THANK YOU to everyone with this important informationl. Teresa
#34
Super Member
Join Date: Jun 2010
Location: Ohio, the land of 4 seasons. sometimes all in the same week!
Posts: 2,487
I keep all my fabric and sewing supply receits. at the end of the year it shows I spent more than I made.=loss. legit. I do give away far more than I sell but when asked to do a particular project and they settle on a price . . . it may cover the fabric but not the time spent so it is hardly worth it trying to say it's a business.
Last edited by cherrio; 03-31-2012 at 08:25 AM.
#35
Senior Member
Join Date: Sep 2010
Posts: 510
About ten or so years ago, I did craft shows it was away to be with my child growing up and making some extra money to help in family bills. Once IRS stepped in and came around booth to booth for a form to fill out so you could get taxed on the amount you made, is the time I quit crafting and going to all the craft fairs. I now just make things to give as gifts. Soon you'll pay for the air you breath!
#37
Super Member
Join Date: Mar 2007
Location: Here and there
Posts: 1,669
In that case, your record keeping will cover you. No one is asking you to pay taxes on money lost in a business. I made $60 on my business last year. I expected to pay taxes on it and I did. I expect everyone else to do the same. dnf
#39
Super Member
Join Date: Jan 2011
Location: Ocean Springs, MS
Posts: 9,287
Yes, I can be a write off as a loss. Check IRS Publication 17 if you have to claim the money you earned. I was told a hobby can not be taxed. We all know that most of us do not sell our quilts for the real value they are worth. Time, supplies, notions, rulers, patterns, fabric (good quality is not cheap), electricity used, and not to mention the maintaince on the sewing machine. My understanding is that if you are not required to have a business license there should not be any taxation.
#40
Super Member
Join Date: Nov 2010
Location: Littlefield, TX, USA
Posts: 1,077
Yep...I have a resale/tax number...you bet I claim what I sell...and I usually don't have to pay much...my costs are deducted from any quilting I do...so it's not bad. I guess I'm strange...don't mind paying taxes...it's only fair.
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