{"id":240,"date":"2024-06-10T01:11:26","date_gmt":"2024-06-10T01:11:26","guid":{"rendered":"https:\/\/blog.suryapadhiea.com\/blog\/?p=240"},"modified":"2024-06-10T01:11:26","modified_gmt":"2024-06-10T01:11:26","slug":"hobby-or-business-what-people-need-to-know-if-they-have-a-side-hustle","status":"publish","type":"post","link":"https:\/\/blog.suryapadhiea.com\/blog\/irs-tips\/hobby-or-business-what-people-need-to-know-if-they-have-a-side-hustle\/","title":{"rendered":"Hobby or business: What people need to know if they have a side hustle"},"content":{"rendered":"\n<p>Issue Number: Tax Tip 2024-55<\/p>\n\n\n\n<p>Hobbies and businesses are treated differently when it comes to filing taxes. The biggest difference between the two is that businesses operate to make a profit while hobbies are for pleasure or recreation.<\/p>\n\n\n\n<p>Whether someone is having fun with a hobby or running a business, if they are paid through payment apps for goods and services during the year, they may receive an IRS Form 1099-K for those transactions. These payments are taxable income and must be reported on federal tax returns.<\/p>\n\n\n\n<p>There are a few other things people should consider when deciding whether their project is a&nbsp;hobby or business. No single thing is the deciding factor. Taxpayers should review all the factors to make a good decision.<\/p>\n\n\n\n<p><strong>How taxpayers can decide if it&#8217;s a hobby or business<\/strong><\/p>\n\n\n\n<p>These questions can help taxpayers decide whether they have a hobby or business:<\/p>\n\n\n\n<ul>\n<li>Does the time and effort they put into the activity show they intend to make a profit?<br>&nbsp;<\/li>\n\n\n\n<li>Does the activity make a profit in some years, and if so, how much profit does it make? &nbsp;<\/li>\n\n\n\n<li>Can they expect to make a future profit from the appreciation of the assets used in the activity? &nbsp;<\/li>\n\n\n\n<li>Do they depend on income from the activity for their livelihood? &nbsp;<\/li>\n\n\n\n<li>Are any losses due to circumstances beyond their control or are the losses normal for the startup phase of their type of business? &nbsp;<\/li>\n\n\n\n<li>Do they change their methods of operation to improve profitability?<\/li>\n\n\n\n<li>Do they carry out the activity in a businesslike manner and keep complete and accurate books and records? &nbsp;<\/li>\n\n\n\n<li>Do the taxpayer and their advisors have the knowledge needed to carry out the activity as a successful business?<\/li>\n<\/ul>\n\n\n\n<p>Whether taxpayers have a hobby or run a business,\u00a0<a href=\"https:\/\/lnks.gd\/l\/eyJhbGciOiJIUzI1NiJ9.eyJidWxsZXRpbl9saW5rX2lkIjoxMjcsInVyaSI6ImJwMjpjbGljayIsInVybCI6Imh0dHBzOi8vd3d3Lmlycy5nb3YvYnVzaW5lc3Nlcy9zbWFsbC1idXNpbmVzc2VzLXNlbGYtZW1wbG95ZWQvcmVjb3Jka2VlcGluZyIsImJ1bGxldGluX2lkIjoiMjAyNDA2MDUuOTU4MjYxNzEifQ.E61aDNsEaIcwnbmvD3LIm7DCEZNHM7BJg2J8RW12h_E\/s\/1822607036\/br\/243631354485-l\">good recordkeeping<\/a>\u00a0throughout the year will help when they file taxes.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full is-resized\"><img decoding=\"async\" loading=\"lazy\" src=\"http:\/\/blog.suryapadhiea.com\/blog\/wp-content\/uploads\/2023\/10\/Corporate-LinkedIn-Banner.jpg\" alt=\"\" class=\"wp-image-153\" width=\"963\" height=\"328\" srcset=\"https:\/\/blog.suryapadhiea.com\/blog\/wp-content\/uploads\/2023\/10\/Corporate-LinkedIn-Banner.jpg 646w, https:\/\/blog.suryapadhiea.com\/blog\/wp-content\/uploads\/2023\/10\/Corporate-LinkedIn-Banner-300x102.jpg 300w\" sizes=\"(max-width: 963px) 100vw, 963px\" \/><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>Issue Number: Tax Tip 2024-55 Hobbies and businesses are treated differently when it comes to filing taxes. The biggest difference between the two is that businesses operate to make a profit while hobbies are for pleasure or recreation. Whether someone is having fun with a hobby or running a business, if they are paid through [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":241,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[12,14,2],"tags":[],"_links":{"self":[{"href":"https:\/\/blog.suryapadhiea.com\/blog\/wp-json\/wp\/v2\/posts\/240"}],"collection":[{"href":"https:\/\/blog.suryapadhiea.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blog.suryapadhiea.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blog.suryapadhiea.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/blog.suryapadhiea.com\/blog\/wp-json\/wp\/v2\/comments?post=240"}],"version-history":[{"count":1,"href":"https:\/\/blog.suryapadhiea.com\/blog\/wp-json\/wp\/v2\/posts\/240\/revisions"}],"predecessor-version":[{"id":242,"href":"https:\/\/blog.suryapadhiea.com\/blog\/wp-json\/wp\/v2\/posts\/240\/revisions\/242"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blog.suryapadhiea.com\/blog\/wp-json\/wp\/v2\/media\/241"}],"wp:attachment":[{"href":"https:\/\/blog.suryapadhiea.com\/blog\/wp-json\/wp\/v2\/media?parent=240"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blog.suryapadhiea.com\/blog\/wp-json\/wp\/v2\/categories?post=240"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blog.suryapadhiea.com\/blog\/wp-json\/wp\/v2\/tags?post=240"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}