If you’re like most people, you probably enjoy spending your free time pursuing hobbies that you’re passionate about. But did you know that you may be able to deduct some of the expenses associated with your hobbies on your taxes?
In order to deduct hobby expenses, you must be able to prove that your hobby is a business activity. This means that you must be able to show that you’re pursuing your hobby for profit.
If you’re not sure whether your hobby qualifies as a business activity, there are a few things you can ask yourself:
-Do I regularly sell the items I make or the services I provide?
-Do I keep detailed records of my expenses and income?
-Do I advertise my business?
-Do I have business cards or a website for my business?
If you answered yes to any of these questions, then there’s a good chance that your hobby qualifies as a business activity.
Once you’ve determined that your hobby is a business activity, you can deduct a variety of expenses associated with it. These expenses can include the cost of materials, advertising, and any other expenses that are necessary to pursue your hobby.
When deducting hobby expenses, it’s important to keep in mind that you can only deduct the amount of expenses that exceed 2% of your adjusted gross income. This means that you can’t deduct the full amount of your hobby expenses; you can only deduct the amount that exceeds 2% of your adjusted gross income.
If you’re not sure how to calculate this, don’t worry! your tax preparer can help you figure it out.
As you can see, there are a few things to keep in mind if you want to deduct hobby expenses on your taxes. But if you’re able to prove that your hobby is a business activity, you may be able to deduct a portion of your expenses.