Hobby income and expenses

Forum|Forum|3 years ago
September 28, 2022
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I recently got into collecting shoes as a hobby, and as a result I am frequently buying and selling shoes. I will be receiving a few 1099s this year and wanted to know what I am liable to pay tax on. For example, if I receive 1099s totaling $10,000, but I only made a $1,000 profit not including any losses, am I liable to pay tax on the total amount of the 1099 or only on the money I actually made as a profit? Thanks.

VincentL

You will need to determine if you are involved in a hobby or a business. Hobby losses are not deductible. Review the following websites:

When the IRS Classifies Your Business as a Hobby

https://turbotax.intuit.com/tax-tips/small-business-taxes/when-the-irs-classifies-your-business-as-a-hobby/L5NClTTtK

Tax Guide for Small Busines

https://www.irs.gov/pub/irs-pdf/p334.pdf

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M3AAuthor

I am considering it a hobby. I know losses aren’t deductible, but is the expense of the shoe considered? From my understanding if I consider it a hobby, I would be liable to pay tax on the full amount of the 1099 even if I did not make that amount as income. Am I incorrect on that?