{"id":65198,"date":"2024-06-06T11:05:48","date_gmt":"2024-06-06T18:05:48","guid":{"rendered":"https:\/\/lapost.us\/?p=65198"},"modified":"2024-06-06T11:05:48","modified_gmt":"2024-06-06T18:05:48","slug":"hobby-or-business-what-people-need-to-know-if-they-have-a-side-hustle","status":"publish","type":"post","link":"https:\/\/lapost.us\/?p=65198","title":{"rendered":"Hobby or business: What people need to know if they have a side hustle"},"content":{"rendered":"<p>Tax Tip 2024-55<\/p>\n<p>June 5, 2024<\/p>\n<p>&nbsp;<\/p>\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<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<p>There are a few other things people should consider when deciding whether their project is a\u00a0hobby or business. No single thing is the deciding factor. Taxpayers should review all the factors to make a good decision.<\/p>\n<p><strong>How taxpayers can decide if it&#8217;s a hobby or business<\/strong><\/p>\n<p>These questions can help taxpayers decide whether they have a hobby or business:<\/p>\n<ul>\n<li>Does the time and effort they put into the activity show they intend to make a profit?<\/li>\n<li>Does the activity make a profit in some years, and if so, how much profit does it make?<\/li>\n<li>Can they expect to make a future profit from the appreciation of the assets used in the activity?<\/li>\n<li>Do they depend on income from the activity for their livelihood?<\/li>\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?<\/li>\n<li>Do they change their methods of operation to improve profitability?<\/li>\n<li>Do they carry out the activity in a businesslike manner and keep complete and accurate books and records?<\/li>\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<p>Whether taxpayers have a hobby or run a business,\u00a0<a href=\"https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\/recordkeeping\">good recordkeeping<\/a>\u00a0throughout the year will help when they file taxes.<\/p>\n<p><strong>More information<\/strong>:<\/p>\n<ul>\n<li><a href=\"https:\/\/www.irs.gov\/businesses\/what-to-do-with-form-1099-k\">What to do with Form 1099-K<\/a><\/li>\n<li><a href=\"https:\/\/www.irs.gov\/businesses\/small-businesses-self-employed\">Small Business and Self-Employed Tax Center<\/a><\/li>\n<li><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-publication-535\">Publication 535, Business Expenses<\/a><\/li>\n<li><a href=\"https:\/\/www.irs.gov\/forms-pubs\/about-publication-334\">Publication 334, Tax Guide for Small Business\u00a0(For Individuals Who Use Schedule C)<\/a><\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Tax Tip 2024-55 June 5, 2024&#46;&#46;&#46;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11,7],"tags":[],"class_list":["post-65198","post","type-post","status-publish","format-standard","hentry","category-business","category-u-s-a"],"_links":{"self":[{"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/posts\/65198","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/lapost.us\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=65198"}],"version-history":[{"count":1,"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/posts\/65198\/revisions"}],"predecessor-version":[{"id":65199,"href":"https:\/\/lapost.us\/index.php?rest_route=\/wp\/v2\/posts\/65198\/revisions\/65199"}],"wp:attachment":[{"href":"https:\/\/lapost.us\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=65198"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/lapost.us\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=65198"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/lapost.us\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=65198"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}